Tuesday, September 29, 2015
The estate of late Detroit Pistons owner Bill Davidson is suing Deloitte Tax LLP over what it calls a risky and flawed estate plan. The suit claims that the tax planner intentionally used dubious planning techniques to create the perception of savings in order to draw in Davidson in as a high profile client they could use to lure other high net worth individuals. The estate seeks in excess of $500 million in damages to cover the increased tax the estate was forced to pay plus interest and penalties. As of now, no trial date has yet been set.
See Mark Hicks, Davidson estate sues Deloitte Tax over $2.7B IRS bill, The Detroit News, September 24, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
Monday, September 28, 2015
A former estate planning attorney that is facing an extensive 33-count Federal indictment will likely face prison time after making a plea agreement to five of those counts. Sarah E.K. Laux faces allegations that she took advantage of elderly clients that came to her for estate planning and trust services. Federal investigators got involved in this case when allegations surfaced that she had stolen up to $3 million from two wealthy clients. More lawsuits and investigations followed leading to the current plea bargain agreements. “Laux will plead guilty to five of the 33 counts in the indictment, one each of bank fraud, mail fraud, wire fraud, money laundering and filing a false tax return.” Prosecutors are agreeing to a below the guidelines sentence provided that Laux reveals everything she stoles and assists them with recovering the lost assets.
See Bruce Vielmetti, Estate planning lawyer facing prison in fraud plea deal, Milwaukee-Wisconsin Journal Sentinel, September 27, 2015.
Thursday, September 24, 2015
A Washington D.C. Appeals Court has recently held that an attorney disciplinary board needs to investigate whether there was a conflict of interest when two attorneys represented both a mother and a son in a conflict involving a trust. The attorney disciplinary board will need to determine if the two attorneys had to have informed consent from both the mother and son. This dispute centered around a trust created in 2002 by Genevieve Ackerman. The son, Dr. Stephen Ackerman, hired two attorneys "John T. Szymkowicz and his son, John P. Szymkowicz, to challenge the trust." The attorneys ended up representing both the mother and son in the suit. The court held that even though the interests of Dr. Ackerman and Ms. Ackerman might be aligned there was still a substantial risk of a divergence of interests. The District of Colombia Court of Appeals decision can be read here.
See Discipline Board Must Examine Whether Attorneys’ Representation of Both Mother and Son Was a Conflict, Elder Law Answers, September 24, 2015.
Tuesday, September 15, 2015
Texas Attorney General Ken Paxton is facing questions about his past involvement as attorney ad litem for the daughters of Tanner Hunt after Mr. Hunt committed suicide. Tanner Hunt was the son of late Billionaire Ray Hunt. This article goes into detail discussing some of the circumstances surrounding Ken Paxton’s role as attorney ad litem. One big matter of controversy is what some view as a very low settlement offer of $750,000 that Paxton put forward with the estate. Hunt’s daughters could have potentially had inheritance claims of $2 million yet he settled for what could be considered a small amount. There are concerns described in this article that Paxton may have had a conflict of interest. Ken Paxton has since defended his work on the inheritance case.
See Lise Olson and Lauren McGaughy, Questions raised on deal for heirs; Paxton defends work, The Washington Times, September 6, 2015.
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.