Wills, Trusts & Estates Prof Blog

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

Wednesday, December 14, 2016

Article on Contractual & Fiduciary Relationships

FiduciaryPaul B. Miller & Andrew S. Gold recently published an Article entitled, Introduction to Contract, Status, and Fiduciary Law (2016). Provided below is an abstract of the Article:

Contractual and fiduciary relationships are the two primary mechanisms through which the law facilitates coordinated pursuit of our personal interests. Contract and fiduciary law are fields often represented in oppositional terms. Many believe that while contract law allows individuals to pursue their interests independently, fiduciary law allows them to pursue their interests in a dependent or interdependent way. This view seems to suggest that the boundaries between contract and fiduciary law are fixed rather than fluid. 

Bringing together leading theorists to analyze important philosophical questions at the intersection of contract and fiduciary law, Contract, Status, and Fiduciary Law demonstrates that popular characterizations of the relationship between contract and fiduciary law are overly simplistic. By considering how contract and fiduciary law interact, and not just how they differ, the contributors to this volume offer new insights into a range of topics, including: status relationships, voluntary undertakings, duties of loyalty, equity, employment law, tort law, the law of remedies, political theory, and the theory of the firm. 

This introductory essay provides an overview of the contributions to the volume, indicating their significance for our understanding of relationships between contract and fiduciary law.


December 14, 2016 in Articles, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Monday, December 12, 2016

Article on Fiduciary Duties & ESG Investing

Fiduciary duty esg2Susan N. Gary recently published an Article entitled, Values and Value: University Endowments, Fiduciary Duties, and ESG Investing, 42 J. C. & U. L. 247 (2016). Provided below is an abstract of the Article:

The trustees managing university endowment funds must comply with fiduciary duties that require the trustees to act in the best interests of the university and to act as prudent investors when managing the funds. This article shows that these fiduciaries may adopt investment policies that consider material environmental, social, and governance (ESG) factors as part of an overall investment strategy. The article explains why older arguments that fiduciaries should avoid “social investing” are no longer relevant and how the prudent investor standard has evolved to include ESG investing. The article discusses the changes in socially responsible investing since the anti-apartheid era and reviews a significant number of empirical studies that show that ESG investing has had a neutral or positive effect on financial return. Based on the empirical work, evidence of the financial industry’s growing use of extra-financial factors in investment analysis, and recent guidance from the Department of Labor, the article concludes that a trustee responsible for a university endowment will not breach the duty of loyalty or the duty to act as a prudent investor by directing the endowment’s use of ESG investing as part of an overall financial investment strategy.


December 12, 2016 in Articles, Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Friday, December 2, 2016

What Happens When Your Husband Hides His $400 Million Fortune?

Hiding moneySarah Pursglove decided to take a deeper look into her husband’s finances when the Finnish entrepreneur left her. Robert Oesterlund swore in court that his fortune only totaled a few million dollars, but Pursglove could think of several family purchases that cost above and beyond that amount. She flew to the Bahamas to figure out what her husband was really worth. There she found an accounting statement that claimed Oesterlund was worth at least $300 million. As she packed her bags for the flight back home, her family’s fortune immediately began disappearing into various shell companies, bank accounts, and trusts under a worldwide financial system catering to the ultra rich. The system effectively offshores wealth and makes the richest people appear to own very little.

Over the next two years, Pursglove would rely on her wealth squad to untangle the defenses of the offshore financial world. It all started when Oesterlund created his businesses and was subsequently looking to avoid costly taxes. Eventually, he set up a Cook trust, suggested by his corporate counsel, who assured him he would be “untouchable.” As Pursglove’s lawyers began to figure out the scheme her husband was surmounting, they filed court documents for a divorce and to impose a sweeping asset injunction, which would prohibit Oesterlund from selling, merging, or borrowing against any of his assets and additional offshoring. The corporate fraud lawsuit proceeded in Florida, where the family’s companies were being run. It was eventually discovered that Oesterlund was using a Bahamas-based company to transfer all his assets and avoid all United States tax liability—a tactic referred to as “transfer pricing.” Pursglove’s attorneys claimed that Oesterlund began to shield assets from his wife as the divorce loomed near. Shortly after a judge ruled that Pursglove could see thousands of her husband’s documents, both sides’ lawyers met and discussed the possibility of Oesterlund going on the run if he had to fork the documents over. Consequently, this brought things to a head. Oesterlund would have to expose himself or threaten his fortune. Oesterlund’s one-time allies were now becoming his enemies to avoid fighting the greater good—the system. The wall of secrecy around Oesterlund’s accounts began to crumble. The case still remains open and the outcome is unknown, but it begs the question: is there justice in wealth battling wealth?

See Nicholas Confessore, How to Hide $400 Million, N.Y. Times, November 30, 2016.

December 2, 2016 in Current Events, Estate Administration, Estate Planning - Generally, Income Tax, New Cases, Professional Responsibility, Trusts | Permalink | Comments (0)

Tuesday, November 29, 2016

Article on Third-Party Liability in Equity

Trustee2Sarah Worthington recently published an Article entitled, Exposing Third-Party Liability in Equity: Lessons from the Limitation Rules, Equity, Trusts and Commerce Ch. 14 (Forthcoming). Provided below is an abstract of the Article:

This article provides a re-examination of third-party liability in equity. The exercise was prompted by a difficult case on limitation periods in equity, but the conclusions – if correct – have far wider significance. Three major points are made. First, it has long been conceded that the language of constructive trusts and constructive trustees is confusing. It is suggested here that the language disguises a relatively straightforward search for situations where there are property splits (trusts) or property management responsibilities (fiduciary responsibilities). Secondly, accessory liability in equity looks to be something of a misnomer, since it appears that the drive is not to find individuals with particular associations with the wrongdoer and shared liability for the primary wrong, but instead to find individuals who are themselves trustees or fiduciaries because of their particular association with the original managed property. Liability follows accordingly, and is primary not secondary liability. Finally, where there are fiduciary responsibilities for property management, liability is in two forms: compensation for loss to the managed assets; and disgorgement of disloyal gains. The former is distinguishable from common law compensation in its focus on remedying loss to the property fund, not the loss to individuals interested in the fund. These insights – in particular the fiduciary characteristics of third parties in equity, and the workings of equitable compensation – have significant practical consequences.

November 29, 2016 in Articles, Estate Administration, Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Friday, November 18, 2016

Why Are Corporate Fiduciaries Distancing Themselves from Special Needs Trusts?

Special needs trustSpecial needs trusts have been a way for disabled individuals to remain eligible for means-tested federal benefits. More institutional support is necessary to manage these funds; however, corporate fiduciaries are distancing themselves from this specialty. Four reasons for this move include increased litigation and regulatory issues; profitability concerns; lack of experience; and lack of time and resources. In order to alleviate these concerns, fiduciaries should start expanding their education through conferences and CLEs. Further, attorneys should ensure that their fiduciary referrals are informed, looking for expertise to navigate legal and regulatory issues.

See Peter J. Johnson, Corporate Fiduciaries Are Shying Away from Special Needs Trusts, Wealth Management, November 15, 2016.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

November 18, 2016 in Disability Planning - Health Care, Elder Law, Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Thursday, November 10, 2016

Proposed Fiduciary Rule to Survive Trump Presidency

TrumpSo much is still unknown about President-elect Donald Trump’s plans for our country, but most are hopeful, or fearful, that there will be major changes. Most are concerned over what will happen with the impending Department of Labor’s fiduciary rule for advisors to retirement accounts. Trump’s win sees the possibility of repeal, changing the outlook of the industry. Ultimately, the possibility of imposing a uniform fiduciary standard seems remote with its immediacy, but the proposed rule for making business succession plans mandatory will most likely propel.

See David Armstrong, Fiduciary Rule Likely to Survive Trump Presidency, Wealth Management, November 9, 2016.

November 10, 2016 in Current Events, Estate Planning - Generally, New Legislation, Professional Responsibility | Permalink | Comments (0)

Wednesday, November 9, 2016

Article on ERISA's Fiduciary Law

Erisa fiduciaryPeter J. Wiedenbeck published an Article entitled, Untrustworthy: ERISA’s Eroded Fiduciary Law, 6 Drexel L. Rev. (2014). Provided below is an abstract of the Article:

The trust law analogy has come to dominate judicial thinking about employee benefit plans. Yet despite its rise to rhetorical prominence, ERISA fiduciary law has been dramatically transformed by a series of uncoordinated low-visibility judicial decisions on multiple fronts. These apparently unconnected case law developments reveal a startling pattern of mutually reinforcing restrictions on ERISA’s protection of pension and welfare benefits. This study makes the case that both the scope and the intensity of fiduciary oversight have been radically pruned back in the courts. Notwithstanding the congressional declaration that attempts to relax workers’ federal fiduciary protections “shall be void as against public policy”, the U.S. Supreme Court has shown the way to curtail fiduciary obligations. That de facto or implicit exculpation, combined with unilateral employer control over both plan terms and plan interpretation, indicate that the federal courts have defanged — or deranged — ERISA’s fiduciary regime.

In the course of chronicling ERISA’s trust law turn and exposing how untrustworthy workers’ fiduciary defenses have become, the article explains, contrasts, extends, and ultimately reconciles the two premier scholarly analyses of ERISA’s fiduciary regime: Daniel Fischel & John H. Langbein, ERISA’s Fundamental Contradiction: The Exclusive Benefit Rule, 55 U. Chi. L. Rev. 1105 (1988); and Dana Muir & Norman Stein, Two Hats, One Head, No Heart: The Anatomy of the ERISA Settlor/Fiduciary Distinction, 93 N.C. L. Rev. 459 (2015).

November 9, 2016 in Articles, Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Tuesday, November 1, 2016

Article on Ethical Attorney Dilemmas for Patients with Alzheimer's

Alzheimers3Joseph Karl Grant recently published an Article entitled, Running Past Landmines—The Estate Attorney’s Dilemma: Ethically Counseling the Client with Alzheimer’s Disease, 24 Elder L.J. 101 (2016). Provided below is a summary of the Article:

This Article examines the ethical dilemmas faced by attorneys who represent clients suffering from Alzheimer's disease. To do so, this Article raises three (3) hypothetical case studies, and applies the ABA Model Rules of Professional Conduct, and the American College of Trust and Estate Counsel (“ACTEC”) Commentaries, where appropriate, to those hypothetical case studies.

Additionally, this Article proposes initiatives to ameliorate the lack of awareness and discussion of Alzheimer's disease in the law school curriculum, and finally, modest initiatives that the practicing bar can embrace to further a discussion and awareness among practicing attorneys about the ethical dilemma attorneys face in their daily interaction with actual and potential clients suffering from Alzheimer's disease.

This article's objectives are twofold. First, the intention is to use this Article as a vehicle to expose law students, legal educators, practicing attorneys, policymakers, and layperson observers to the impact, medical symptoms and manifestations of Alzheimer's disease in accessible and easy to understand terms. Second, to use this Article as a tool for teaching, raising understanding, and providing guidance on a multitude of ethical considerations that law students (who will soon be lawyers) and practicing members of the bar should consider while being exposed to actual or potential clients who suffer from Alzheimer's disease.

November 1, 2016 in Articles, Elder Law, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (1)

Tuesday, October 25, 2016

Article on Trends in Trust Law That Undermine Fiduciary Accountability

Trust fiduciaryAlan Newman recently published an Article entitled, Trust Law in the Twenty-First Century: Challenges to Fiduciary Accountability, 29 Quinnipiac Prob. L.J. 261 (2016). Provided below is a summary of the Article:

This Article analyzes recent legislative trends in trust law that undermine--sometimes intentionally and sometimes inadvertently--fiduciary accountability in the administration of trusts. A primary focus in this analysis is the growing use of third parties, often referred to as “advisers” or “protectors,” who are authorized to exercise control over the trustee's administration of the trust, and newly enacted statutes addressing their use in many jurisdictions. But fiduciary accountability for trustees has been weakened in recent years by state legislatures in a variety of other ways. Before turning to recent legislation addressing trust advisers and protectors, this Article examines statutes addressing: (i) exculpatory clauses; (ii) the trustee's duty to account; (iii) the limitations period for a beneficiary to pursue a claim against a trustee for breach; (iv) the trustee's duty of loyalty; (v) the nature of a beneficiary's interest in a discretionary trust; and (vi) trust decanting.


October 25, 2016 in Articles, Estate Planning - Generally, New Legislation, Professional Responsibility, Trusts | Permalink | Comments (0)

Saturday, September 10, 2016

Personal Representative of Estate Cannot Waive Privilege Between Guardian & Attorney

Attorney client privilegeAttorney-client privilege might be the most ancient of the confidential communication privileges. The privilege was codified in Florida at § 90.502. As time passed, the law evolved, creating an exception to privilege—the fiduciary-duty exception for when the client was a fiduciary and the lawyer’s services were for a third party. In 2011, however, Florida enacted § 90.5021, the fiduciary-lawyer client privilege, which appeared to infringe on the exception. This Section defines who qualifies as a fiduciary and further explains that the fiduciary-lawyer relationship would be protected just the same as a non-fiduciary relationship. Additionally, the Section explains that only the fiduciary is considered a client of the lawyer.

In Bivins v. Rogers, the plaintiff was the personal representative of his father’s estate. The defendant was one of several guardians appointed to exercise the father’s rights. After his father’s death, the plaintiff sued, seeking production of communication between the defendant and his attorneys and accountants. The question to the court was whether § 90.2051 precludes someone besides the client from waiving privilege when the client is a fiduciary. The court held that it does. This ultimately suggested that there was no ambiguity about the statute’s validity, making the fiduciary-duty exception irrelevant.

 See Jordan Hammer, Personal Representative Cannot Waive Privilege Between Guardian and Attorney, Florida Probate Lawyers, September 8, 2016.

September 10, 2016 in Estate Planning - Generally, Guardianship, New Cases, Professional Responsibility | Permalink | Comments (0)