Repository: UIHistories Project: Board of Trustees Minutes - 1982 [PAGE 519]

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508

BOARD OF TRUSTEES

[April 15

CALL TO EXECUTIVE SESSION

President Stone, referring to Section Two of the Open Meetings Act, stated: "A motion is now in order to hold an executive session to consider information regarding the appointment, employment, or dismissal of employees or officers, and to discuss pending, probable, or imminent litigation against or on behalf of the University." The motion was made by Mr. Howard and approved by the following vote: Aye, Dr. Donoghue, Mr. Forsyth, Mr. Hahn, Mr. Howard, Mr. Madden, Mrs. Shepherd, Mr. Stone; no, none; absent, Mrs. Day, Mr. Neal, Governor Thompson. (The student advisory vote was: Aye, Mr. Bandala, Mr. Bettenhausen, Mr. Persons; no, none.) By consensus, the board agreed that one roll call vote would be taken and considered the vote on each agenda item nos. 1 and 2. The recommendations were individually discussed but acted upon at one time. (The record of board action appears at the end of each item.)

Edna M. McLaughlin Estate

(1) At its May 21, 1981, meeting the Board of Trustees authorized settlement of certain matters asserted against the Edna M. McLaughlin Estate by James McLaughlin, a nephew of the decedent's husband. In issue at that time was the allocation of certain administration expenses and federal taxes as well as the right of the nephew to acquire 106 acres of farm land in McLean County for $78,440, which then had a value of between $300,000 and $400,000. Under the Edna M. McLaughlin will, her residuary estate was placed in a thirty-year trust with the Belleville National Savings Bank for the benefit of the University of Illinois for the purpose of paying educational costs of students on the basis of their financial needs. Five percent of the value of the residuary estate is to be paid to the University annually during the thirty-year period, at the end of which the trust is to terminate and the principal distributed to the University to be used for the stated purposes. The farm land in question was purchased by the decedent and her husband at auction in 1968 for $78,440. The nephew contended that the decedent and her husband were acting as his financial backers in the purchase of the land, which he farmed, and that the title was to be transferred to him when the farm income equalled the purchase price. In April of 1977, after the decedent's husband's death, the decedent entered into an option agreement pursuant to which the nephew was given the option to purchase the farm for $78,440.00. The Internal Revenue Service treated the 1977 option agreement as a gift in contemplation of death, thereby increasing the federal estate tax by $72,000 after allocating certain administration expenses to the nephew's interest. T h e settlement approved by the board in May 1981 allowed the nephew to purchase the property at the price of $150,000 and the executor was not to seek recovery of any federal estate or gift taxes or administration expenses from the nephew, even though apportionment of the administration expenses was claimed on the federal estate tax return. Subsequently, the Internal Revenue Service reversed its position on apportionment in the light of recent Illinois cases and reduced the allowable charitable deduction by the amount of the taxes and expenses previously claimed as apportionable to the nephew's interests. The will contains no provision directing payment of taxes or administration expenses.