Sunday, January 24, 2016
The Colorado Supreme Court has recently reexamined the issue of whether an attorney can be held liable to a non-client in a legal malpractice lawsuit. In Baker v. Wood, the court affirmed Colorado’s general history of classifying claims of attorney malpractice by non-clients as being untenable. “Historically, in Colorado, attorneys have been liable to non-clients only for fraud, malicious conduct, and negligent misrepresentation resulting in business-related pecuniary losses.” The ruling means that an attorney does not owe a legal duty of care unless there is some sort of an attorney-client relationship. There are many important public policy reasons for having such a strict privity rule. An attorneys liability should not be extended to include an unforeseeable and potentially unlimited number of claims from third parties who they never even represented. The decision by the Colorado Supreme Court can be read here.
See Miles Buckingham, Colorado Supreme Court’s Baker Opinion Affirms Narrow Window of Liability for Attorneys, Nemirow Perez P.C., January 20, 2016.
Special thanks to Professor Jerome Borison (Sturm College of Law, University of Denver), for bringing this opinion to my attention.
Friday, January 22, 2016
There is currently a legal battle brewing over a $100 million fee submitted by the executors overseeing the estate of the late hotel magnate Leona Helmsley. Lawyers for New York Attorney General Eric Schneiderman have argued that the $100 million fee is “exorbitant, unreasonable and improper,” and they say that a fee of $10 million would be more reasonable for the work that was done. Helmsley was known as the “Queen of Mean” and became famous when her Will left $12 million to her dog Trouble (who eventually sadly only got $2 million). The bulk of the hotel magnates $4.8 billion estate was left to charity. The executors, who “are two grandchildren, an attorney and a business adviser” have defended the large fee by saying that they administered an “extraordinarily complex estate…in the face of enormous risks.”
See Battle brews over $100M fee billed to ‘Queen of Mean’ NYC estate, Fox News, January 22, 2016.
Monday, January 18, 2016
Dealing with dysfunctional families can be a difficult job for a financial advisor. A good advisor will need to learn how to adapt and modify their strategy to deal with any given number of possible situations. Litigation involving wills or trusts can get complex and expensive, and a good financial advisor should be able to avoid these types of situations with careful estate planning. Tangible personal items that might not have a lot of monetary value might have important sentimental value to certain family members, and it will be extremely important to plan ahead for these type of personal items in any estate planning. Advisors will need to help family members communicate with each other so that they can agree to a plan and avoid costly legal battles in the future.
See Keith A. Davidson, Family Dysfunction Takes a Different Approach: Adapt and Modify, Albertson & Davidson LLP, January 7, 2016.
Special thanks to Jim Hillhouse for bringing this article to my attention.
Saturday, January 16, 2016
The internet is making it easier for clients to be less personal and more objective when looking for an advisor, and there is one review site in particular that financial advisors should be aware of. “Enter GradeMyAdvisor.com, a site that aims to rate advisors objectively based on portfolio performance and the risk taken to achieve that performance.” The website judges a professional’s competency as an advisor and uses many of the same analytics that firms often use to evaluate their own advisors. The service is free and private for investors which means that advisors are going to be unaware if their client is using the service. Some experts have expressed concerns that this online service could easily backfire for advisors. Regardless of one’s opinion on the benefit of this service this is something that financial advisors should know about.
See Zina Kumok, GradeMyAdvisor: What Advisors Should Know, Investopedia, January 15, 2016.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
Thursday, December 31, 2015
Under a new proposal for financial planners created by the Department of Labor (DOL) all advisors and salespersons will be automatically elevated to level of fiduciary. This will mean that they will have to disclose any compensation that they earn from the sales or services that they provide to their clients. If these new proposed regulations are implemented this will have a huge impact on the annuity industry. There is opposition to these new proposals from within the industry with claims that the new requirements will lead to higher costs. Congress will have to eventually decide on whether to adopt the DOL proposals. People within the annuities industry that will be impacted by these proposed regulations will be eager to find out what the outcome is.
See Mark P. Cussen, What the Fiduciary Proposal Means for Annuities, Investopedia, December 31, 2015.
Thursday, December 24, 2015
A large number of Americans have individual retirement accounts (IRAs) that estate planners often use to help their clients manage assets. There are many estate planning attorneys, accountants, and financial planners that have to face headaches about the potential for liability over their management of a client’s IRA account. This article provides examples of hypothetical situations where different estate planning professionals encounter issues that cause them to become open to personal liability. The rules and regulations governing traditional IRAs, Roth IRAs, taxes, and all of the other issues dealing with IRAs can be very complex and very few individuals are gurus in this subject material. People that are involved in a profession dealing with IRAs or estate planning in general should use prudence and caution when making decisions.
See Seymour Goldberg, New Liability Concerns for Accountants, Financial Planners and Attorneys Regarding IRA Advice, Accounting Today, December 23, 2015.
Monday, December 21, 2015
An attorney who once wrote a regular column on elder law was arrested and also disbarred for second degree theft from a client. Back in 2007 Francis and Susan McSpedon hired Cape Corral attorney William Edy to prepare a trust for them. Shortly after that Susan passed away from asbestos related lung cancer. She was a plaintiff in a lawsuit and won a settlement. The issue came up when the settlement checks were sent to William Edy instead of Francis McSpedon. Edy skimmed money from the settlement checks and Francis had to hire another attorney to get the money back. Elder financial abuse is a growing problem and there are statistics showing a greater risk of attorney misbehavior in places with large populations of retirees. This is a problem that is going to continue into the future as the senior citizen population continues to grow. The report on Mr. Edy's disbarment can be read here.
See Melanie Payne, Elder law attorney rips off seniors, news-press, December 21, 2015.
Thursday, December 17, 2015
An estate planner in South Dakota has been sentenced to more than three years in federal prison for fraud. The 58-year-old Randall McKee was also ordered by U.S. District Court Chief Judge Jeffrey Viken to pay more than $685,000 in back pay to go along with his three-year sentence for his conviction for multiple counts of wire fraud and money laundering. Authorities had accused mr. Mckee of setting up a real estate development scheme that had defrauded investors of over $625,000. “Authorities also accused McKee of using his position as a trustee for a disabled man to take more than $80,000 for his own use.” According to this column the scheme conducted by the Sioux Falls resident had gone on for years. Wire fraud and money laundering are serious issues in estate planning and such conduct can have both civil and criminal consequences.
See South Dakota estate planner gets over 3 years in prison in fraud case, KSFY, December 16, 2015.
The State Supreme Court in New Jersey rebuked an attorney who violated ethics rules by borrowing from an elderly client. According to the Court William J. Torre borrowed more than 70% of the life savings from an 86-year old woman identified as “M.D.” In order to deal with New Jersey's "serious and growing problem of elder abuse" the court imposed a one-year suspension, which is more than the penalty that was recommended by an ethics panel. The decision is intended to provide notice to other attorneys not to commit this type of misconduct. Incidents of elder abuse like this one is a growing problem as society continues to age. These are the type of issues that people will need to carefully plan ahead for. The New Jersey Supreme Court's complete unanimous 16-page decision on this matter can be read here.
See S.P. Sullivan, N.J. Supreme Court rebukes lawyer who borrowed most of elderly client's savings, NJ.com, December 16, 2015.
Wednesday, December 16, 2015
Clark County Nevada has recently been racked by an ongoing scandal concerning oversight of the county's guardianship system which has sparked calls across the nation for reform. At the heart of the matter is that guardians will often have tremendous power and influence over their ward but not always with oversight. Sometimes the situation is self regulating such as when a ward is in contact with other people that can at least monitor the effect the guardian is having. But in instances where the guardian controls everything and the ward does not have contact, for various reasons, with outsiders then the potential for abuse is high. In Clark County, their efforts at reform have centered around increased funding to allow the court to better monitor the acts of a guardian which is certainly a step in the right direction. However, the most important step that can be taken is better screening of guardians before they are appointed. A careful examination of a guardian's qualifications, including the ability to put the wards interest over their own, would be the best step to prevent abuse. However, it will ultimately require a grab bag of protections ranging from pre-appointment screening to active oversight, by the court and others relevant parties, to combat abuse in the guardianship system.
See Kyle E. Krull, What are Courts Doing To Avoid "Guardianship" Abuse, Kansas Missouri Estate Planning Blog, December 10, 2015.