Friday, September 11, 2015
Gerry W. Beyer (Texas Tech University School of Law) recently published his article entitled, Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns, 5 St. Mary's J. Legal Mal. & Ethics 224-284 (2015). Provided below is an excerpt from the article:
An estate planner may become a defendant in a case involving an estate he or she planned in two main ways. First, the attorney may have performed his or her services in a negligent manner potentially creating exposure to malpractice liability. Second, the attorney’s conduct may have lapsed below ethically acceptable standards.
This article reviews the exposure an estate planner may have to malpractice liability with emphasis on Texas law and then focuses the reader’s attention on ethical issues that may arise while preparing or executing the plan. I hope that by pointing out potentially troublesome areas, the reader will avoid the ramifications of drafting a flawed estate plan or having a lapse of ethical good judgment which may lead to the frustration of the client’s intent, financial loss to the client or the beneficiaries, personal embarrassment, and possible disciplinary action.
Saturday, September 5, 2015
A financial advisor taking on the position of executor does not violate FINRA policies, but it is still a responsibility that he or she should be cautious about undertaking. There are many firms that might have their own policies against advisors serving as executors so it might be a good idea to call a compliance officer. According to National Compliance Services Attorney Alan Foxman taking on the position of executor is a potential “minefield” that advisors should think twice about. It is important to note that an executor and trustee is not the same thing and the tasks involved with being an executor require a lot of work and headaches. There could also be additional expenses and fiduciary responsibilities that the advisor would have to take on.
See Andrew Shilling, Understand the Challenges of Being an Executor, Financial Planning, August 30, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
Wednesday, September 2, 2015
An arbitration panel with the Financial Industry Regulatory Authority (FINRA) has recently awarded an elderly couple $2.5 million in an investment fraud case. This is just one of many cases pending against UBS, which recently disclosed it faces about $1 billion in claims. Even though UBS was required to diversify its investments, the court found that the investment fund was over concentrated in the Puerto Rico bond market. The elderly couple had invested a major portion of their money with disgraced stockbroker Jose Gabriel Ramirez Jr., who had been in trouble on multiple occasions and even lost his brokerage license. Mr. Ramirez attempted to plead the fifth in this recent case, but the FINRA arbitration panel decided in favor of the elderly couple.
See UBS to Pay Elderly Couple $2.5 Mil in Investment Fraud Case, Mahany & Ertle, September 2, 2015.
Saturday, August 29, 2015
A Milwaukee woman has been convicted for stealing over $50,000 from her granddaughter’s inheritance. Prosecutors say that Betty J. Coleman lied about her past criminal history in order to be named as her granddaughter’s legal guardian. The young granddaughter had been the beneficiary of a $50,000 inheritance from Coleman’s deceased husband. When Coleman was appointed guardian in April 2013 and later received the inheritance money in May she was told to invest $20,000 of it and to use the rest for her granddaughter’s benefit. She ended up spending all of the money within five months of receiving it. On Friday Betty J. Coleman was sentenced to 3 ½ years in prison for misappropriating her granddaughters inheritance.
See Bruce Vielmetti, Woman sentenced after blowing granddaughter’s inheritance, Milwaukee Wisconsin Journal Sentinel, August 28, 2015.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
Tuesday, August 25, 2015
A man who is attempting to claim a deceased Staten Island millionaire’s fortune is in a disagreement with his attorney for withdrawing his Will. Two years ago Anthony J. Allegrino filed a will claiming that he was the heir to Holocaust survivor Roman Blum’s $40 million fortune. The disagreement started when Allegrino’s attorney, Martin Cohen, sent a letter to the court stating that he would be withdrawing the will. Allegrino has since denied that he retracted his claim, and as a result of the conflicting information the parties will all be due back in court on August 26. The sitting Judge has threatened to dismiss the case if the parties do not appear.
See Mira Wassef, Man claiming millionaire’s fortune at odds with his lawyer over withdrawing will, SI Live, August 18, 2015.
Friday, August 21, 2015
In New Zealand a court has held that a son must account for squandering his nephew’s share of his father’s estate. Justice Stephen Kos of the High Court in Wellington has held that Ashley Vernon and his wife Beverly Vernon will have to pay back the money that they owe their 19-year old nephew. When Kenneth Vernon went to go live with his son in March 2006 he had an estate that was worth $330,000, and when he died in September 2011 only $1,400 was left in the estate. “Justice Stephen Kos found that Ashley Vernon knew he was due to inherit only half his father's estate and set about forestalling that by transferring virtually all of it, while his father was still alive, to himself and his wife.”
See Inheritance lost: Son spends estate money before nephew can get his share, Business Day, August 20, 2015.
Thursday, August 20, 2015
I have previously discussed the story about the Portsmouth Police Sergeant who was controversially named as the beneficiary of a $2.7 million estate. Police Sergeant Aaron Goodwin is now contesting his termination from the police force as a result of his involvement in the inheritance dispute. Goodwin’s termination case is expected to go into an arbitration process that could last from six months to a year. The Chief of Police Stephen DuBois fired Goodwin in June because of his relationship with Geraldine Webber, the wealthy decedent who named Goodwin the beneficiary of her estate. This relationship included taking Webber out to drinks and even to a casino at one point.
See James A. Kimble, Portsmouth officer to contest firing after inheritance scandal, New Hampshire Union Leader, August 19, 2015.
The position of Trustee is a stressful one that carries with it a great amount of fiduciary responsibilities. A trustee can be held personally liable for breaching the fiduciary duties that come with the position. It is common for grantors to include exculpatory clauses that can protect a trustee from potential liability. Grantors may include an exculpatory clause to try to encourage someone to take on the responsibility. Exculpatory clause limits vary from state to state. The Supreme Court in Nebraska has recently invalidated an exculpatory clause in Rafert v. Meyer, holding that the particular clause in question went too far. The Court looked to the Nebraska Uniform Trust Code when it cited to the certain subjects that can limit a Trust’s exculpatory clause.
See Luke Lantta, Limits Of Exculpatory Clauses In Trusts, Bryan Cave LLP, August 12, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
Tuesday, August 4, 2015
If a person is serving as a fiduciary they may want to consider obtaining a fiduciary bond, many States actually have statutes that require such instruments. Fiduciary bonds are legal instruments that act as insurance for beneficiaries when a trustee fails to perform his or her fiduciary duties. The surety (typically the bonding company or individual acting as surety) will pay the court a specified amount when fiduciary duties are breached. Some State statutes require fiduciary bonds, but even if they don’t people may still want them if there are concerns about the trustworthiness or financial status of the fiduciary.
The amount of bond a person needs to get depends on the amount of assets that the fiduciary is managing. Fiduciaries are generally responsible for acquiring bonds by looking for a bonding company. Most States provide exemptions to corporations, banks, and trust companies under the assumption that such entities have enough assets to pay back the beneficiaries.
See J. Robert Smith, Fiduciary Bonds- Who Needs Them?, The National Law Review, August 3, 2015.
Friday, July 31, 2015
In Savannah Georgia the longtime Chatham County Probate Court Chief Clerk Kim Birge has plead guilty to stealing $232,000 in a scheme. The Clerk confessed to raiding certificate of deposits belonging to other people for her own benefit. The government case alleges that the clerk used U.S. Mail and private commercial carriers as a part of the scheme. Kim Birge apologized to the clerk for her role in the scheme that involved stealing more than $750,000 in a three-year period. “I have asked God for forgiveness and I am asking this court for forgiveness as well.”
See Jan Skutch, Chief clerk pleads guilty to stealing $232,000 from Chatham County Probate Court, Savannah Morning News, July 31, 2015.