In Diotallevi v. Diotallevi, 2013 IL App (2d) 111297, http://www.state.il.us/court/Opinions/AppellateCourt/2013/2ndDistrict/2111297.pdf (Ill. App., 2014), the court denied claims by relatives of a divorced couple to two land trust properties that were made more than five years after the relatives made loans to the couple for their tree nursery business. The couple formed an LLC including the relatives, but took no action to create an LLC interest in the land trust properties. The court held the LLC and loans did not create a fiduciary obligation on the couple’s part to inform their relatives that they had not acted, since the status of the properties was a matter of public record, and so denied relief against the land trust properties and the defendants since the family plaintiffs sued after the five year statute of limitations period for a fraud action had run. The allocations the borrowers made in their divorce agreement were allowed to stand, though the court did allow the family lenders to bring this separate action to challenge them even after the divorce decree was final.
The take-away: Get all the property you want to include in a deal conveyed to your deal entity before you sign over the funds you plan to loan. Document all deals with family as if they were hostile strangers. Someday, they may be.