Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Tuesday, March 15, 2016

Broker Misconduct Is A Growing Issue With Elderly Clients

AgingA study that was conducted by the University of Chicago and University of Minnesota has revealed some shocking things about broker misconduct. The study called “The Market for Financial Adviser Misconduct” found that broker misconduct is common in counties that have a high concentration wealthy elderly people. The researchers “reviewed disciplinary records over a 10 year period, covering about 640,000 brokers in almost 4000 securities firms, according to an On Wall Street article from March 2, 2016.” This article discusses some of the steps that people can take to research their brokers. There are resources available that people can use to obtain information. It is important to carefully research brokers and financial advisers ahead of time. Sometimes it might not be a bad idea to get a second opinion.

See Carolyn Rosenblatt, What Your Aging Parent’s Broker Isn’t Telling You, Forbes, March 15, 2016.

March 15, 2016 in Elder Law, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Friday, March 11, 2016

A Fiduciary Opportunity Created By Collective Investment Trusts

Charitable trustOne thing that has become common in the retirement plan industry are lawsuits regarding fees charged in 401(k) plans. Many fiduciaries assume that they can alleviate the risks of lawsuits by using low-cost or index strategies. This article mentions ERISA as an example of a plan where fiduciaries must make investment decisions based solely on the needs of the plan’s beneficiaries. When fiduciaries make investments they must act "with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims." Fiduciaries of 401(k) plans have an obligation to provide the best service possible to the beneficiaries of the plan.

See Manning & Napier, Collective Investment Trusts: A Fiduciary Opportunity, Seeking Alpha, March 11, 2016.

March 11, 2016 in Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Some Of The Important Elements Of A Non-Disclosure Agreement

SecretThere are many instances in business when a person will want to share confidential information with another party, but to do this safely often requires a non-disclosure agreement. This article discusses some of the key terms that a non-disclosure agreement (also known as a “confidentiality agreement”) must include. It makes sense to have a confidentiality agreement when a business person wants to convey information to another business person without the risk of having that information stolen or used without approval. The two basic formats of a non-disclosure agreement are a mutual agreement or a one-sided agreement. This article examines and explains the key elements of a non-disclosure agreement. It also takes a look at some of the additional provisions that can help to strengthen a non-disclosure agreement.

See Richard Harroch, The Key Elements Of Non-Disclosure Agreements, Forbes, March 10, 2016.

March 11, 2016 in Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Tuesday, March 8, 2016

The Important Role That Trustees Play

Trustee keyWhen a person is creating a trust it is critical to select the right trustee. Appointing a family member for the position is not always a good idea and it is often better to appoint a third party to serve in the position of trustee. This article discusses the important qualifications that a person needs when taking on the fiduciary responsibilities of the role of trustee. Trustees will need to perform many different tasks and it is important for them to have strong administrative skills. They should also have investment knowledge as well as tax and accounting skills. It is also extremely important for a trustee to be aware of his or her own limitations and to seek out professional help when they need it. Trustees have many fiduciary responsibilities and having personal integrity is a must.

See Walt Zaremba, Trustees Have the Keys to Your Kingdom, Daily Press, March 8, 2016.  

March 8, 2016 in Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Sunday, March 6, 2016

Article On The Erosion Of Fiduciary Singularity

AdamhAdam S. Hofri-Winogradow (Faculty of Law – Hebrew University of Jerusalem; University of Connecticut School of Law) recently published an article entitled, The Erosion of Fiduciary Singularity: Contract, Trust, and Corporation, Iowa Law Review (2015). Provided below is an excerpt from the article:

This Article presents a new theory of fiduciary relationships. Using legal analysis, legal theory and the results of an unprecedented global survey of professional fiduciaries, I show that fiduciary relationships are not now fundamentally different from contractual relationships. I then show how different types of fiduciary relationships are converging. Scholars commonly claim that trusts are very different from corporations, and that the fiduciary obligations imposed on trustees are more severe, and more severely enforced, than those imposed on corporate directors and officers. I show how this view is not borne out by large parts of both current law and current practice. That neither fiduciary relationships generally, nor traditionally distinct types of such relationships, can now be distinguished from other relationship types expresses the current reformulation of most social and economic relationships as short-term, arm's length, commodified transactions. Because it expresses such an overall transformation, the commodification of fiduciary relationships is unlikely to be reversible by law reform returning fiduciary law to its protective roots.

March 6, 2016 in Articles, Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Saturday, March 5, 2016

Strategies For Dealing With Controlling Clients

Grading advisorOne of the difficulties with working with successful clients is that they can sometimes be controlling. “High achievement often corresponds to the need to exert authority over, and influence, others.” This article discusses the strategies and techniques that can be used when working with these types of clients. Oftentimes this personality is a defense mechanism and it is important to understand what drives and triggers these defenses. An adviser should understand when a client feels like they are losing control and they should know when to validate those concerns. They should be tuned into their client’s feelings of fear, anxiety, and sense if they are being overwhelmed. Advisers should understand their client’s defenses and should also know themselves to figure out the best way they can respond to those defenses. Understanding what strategies to use can help an adviser form a better professional working relationship with their client.

See G. Scott Budge, Understanding, and Managing, Overly-Controlling Clients, Wealth Management, March 4, 2016.

Special thanks to Jim Hillhouse for bringing this article to my attention.

March 5, 2016 in Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Friday, March 4, 2016

How New Fiduciary Rule Could Impact Financial Broadcasters Like Dave Ramsey

Dave ramseyPopular talk show host Dave Ramsey has expressed concerns about how the Department of Labor’s new Fiduciary Rule will impact financial broadcasters like him. Ramsey provides financial advice to listeners who call into his radio program. Some critics like insurance agent Michael Markey have been calling for financial broadcasters like Dave Ramsey to be regulated under the Fiduciary Rule if their advice proves to be harmful. There are concerns about the effects that this new rule will have on free financial discussion in the media. Exceptions do exist for recommendations made to the general public, but that would not protect Dave Ramsey or any other talk show host who regularly gives individual advice to callers. This issue is an interesting debate about the balance of freedom of speech with the need for consumer protection.

See John Berlau, How Fiduciary Rule May Censor Financial Broadcasters Like Dave Ramsey, Forbes, March 4, 2016.

March 4, 2016 in Current Affairs, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Tuesday, March 1, 2016

How To Deal With The Deductibility Of Investment Advisory Expenses

Mortgage2This article provides a specific outline for how the rules dealing with the deductibility of investment advisory expenses apply to estate and non-grantor trusts. There is a lot of confusion concerning the subject of the deductibility of investment advisory expenses. This article explains the application of Section 212 limitations on estates and non-grantor trusts. The IRS has also amended the date that these regulations will go into effect to begin on January 1, 2015, for all estates and trusts. There is a requirement to unbundle fiduciary and investment fees that is explained in this article. This article is the the second in a series, and there will be more in depth articles in the future dealing with these subjects. If people want to learn more about how these new rules will impact them they should speak with an estate planning professional who specializes in this area.

See Domingo Such III and Tina Milligan, Deductibility of Investment Advisory Expenses: Estates and Non-Grantor Trusts, Wealth Management, February 29, 2016.

Special thanks to Jim Hillhouse for bringing this article to my attention.

March 1, 2016 in Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Thursday, February 18, 2016

When An Executor Fails To Properly Administer An Estate

ExecutorThere can be terrible consequences for beneficiaries when an executor fails to properly administer an estate. Executors possess broad authority to control all aspects of an estate, and the value of an estate can be diminished if they act improperly. This column discusses some of the rights that beneficiaries have when it comes to taking action to enforce both the estate and the executor’s fiduciary obligations. This article provides a list of the type of executor misconduct that can devalue an estate. Beneficiaries do have rights to not have the value of their estates mismanaged by an incompetent executor who can be subject to court oversight. The type of remedies that a beneficiary would be entitled to depends on the situation, but beneficiaries need to take action as soon as possible if they suspect that an executor might be improperly administering an estate.

See Robert F. Morris, What Can I Do If Executor Abuses Estate?, The National Law Review, February 17, 2016.

February 18, 2016 in Estate Planning - Generally, Professional Responsibility, Trusts, Wills | Permalink | Comments (0)

Retirement Plan Advisors Will Face More SEC Scrutiny

SECThe SEC is going to place more scrutiny on retirement advisers through its Office of Compliance Inspections and Examinations (OCIE). “As was true in 2015, OCIE has placed “examining matters of importance to retail investors, including investors saving for retirement” at the top of its list of exam priorities for this year.” The OCIE is conducting examinations of SEC-registered investment advisers and broker-dealers through a multi-year targeted examination program called the Retirement-Targeted Industry Reviews and Examinations Initiative (ReTIRE). This will be in addition to the Department of Labor’s recent efforts to increase scrutiny on retirement advisers. It is important for advisers to put in place a deeply ingrained fiduciary best-practice structure that covers ERISA and securities regulations. Taking the necessary steps to adopt better practices will put advisory firms in a good position to prepare for OCIE and DOL regulations.

See Blaine F. Aikin, Not just the DOL: Retirement plan advisers must prepare for increased SEC scrutiny, Investment News, February 18, 2016.

February 18, 2016 in Elder Law, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)