Rush University Medical Center v. Sessions

Robert Sessions (defendant) created an irrevocable inter vivos trust, placed most of his assets in the trust, and made himself a lifetime beneficiary. This self-settled living trust (1) authorized the trustees to distribute trust assets and income to Sessions for his support and happiness during his lifetime, (2) gave Sessions complete control over who was a trustee while he was alive and who would be a trust beneficiary after his death, and (3) contained a spendthrift provision prohibiting the use of trust assets to pay creditors of Sessions or his estate. This trust contained approximately $20 million in assets. After the trust was created, Sessions pledged to pay Rush University Medical Center (the hospital) (plaintiff) $1.5 million to build a new residence for the university’s president, specifically agreeing that any portion of this amount not paid during his lifetime would be paid from his will, estate, or living trust. The hospital built the new residence and honored Sessions at the ribbon-cutting ceremony, but Sessions never paid any of the $1.5 million while he was alive. Sessions was then diagnosed with late-stage lung cancer. Sessions blamed the hospital for not diagnosing the illness sooner, changed his will to eliminate paying the promised $1.5 million to the hospital, and moved or gave away most of his money that was outside the original living trust. Sessions died a few months later. The hospital filed a claim against Sessions’s estate (defendant) for the $1.5 million, but the only money in the estate to satisfy the debt was in the living trust, with its protective spendthrift provision. The trial court found that the spendthrift provision was void as to Sessions’s creditors and ordered the trust to pay the hospital. The estate appealed.