Wills, Trusts & Estates Prof Blog

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

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Monday, November 10, 2014

Nearly Two Decade Long Griffin Family Feud Expected to Begin Trial in January

Gavel2As I have previously discussed, the $840 million sale of Griffin Industries in 2010 reignited a family feud between four Griffin sisters and three Griffin brothers over inheritance and control of the company. Griffin Industries, created by the siblings' deceased father John Griffin, is a Kentucky animal-rendering company.

The feud that has continued for nearly 20 years may be coming to a close. A January trial date is expected to be scheduled this week. In a previous ruling, it was held that two of the brothers breached their fiduciary duties in their administration of their parents' estates through stock transactions in the 1980s, which gave them control of the company at their siblings' expense.

See  Dan Monk, Family Feud: Griffin Industries Inheritance Fight Still Going Strong After 19 Years; Could End Soon, WCPO, Nov. 8, 2014.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

November 10, 2014 in Estate Administration, New Cases, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Sunday, November 9, 2014

Attorney Charged With Stealing From Family Members' Estates

TheftA New Jersey attorney is facing five to ten years in state prison after being charged for theft. The attorney, John F. Hamill, is accused of stealing from two estates, his aunt's and his cousin's, that he was the executor of. Hamill allegedly stole nearly $500,000 from the two estates, by depositing funds into his own account from his aunt's estate and making cash withdrawals from his cousin's estate. The funds are believed to have been used to pay off debts owed by Hamill and for personal use.

See Caitlin Brown, Hudson County Attorney Arrested and Charged with Stealing Almost $500,000 From Estates of Cousin, Aunt, Nov. 7, 2014.

Special thanks to Reid K. Weisbord (Vice Dean, Professor of Law, School of Law-Newark) for bringing this article to my attention. 

November 9, 2014 in Estate Administration, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 5, 2014

Fee Agreement Cannot Solely Rely on Statutory Schedule, Says Florida Court

GavelA Florida estate planning attorney will have to pay back his fees collected for estate administration services and cannot discharge the debt in bankruptcy due to his actions constituting breach of fiduciary duty, according to a Federal district court in Florida. The attorney became co-trustee of his deceased client’s trust, and then entered a fee agreement to perform administrative duties for the estate and trust as an attorney. The fee agreement stated that he would charge a fee according to the Florida Probate Code and the Florida Trust Code, but no specified amount or method of calculation.

In West v. Chrisman, the court held that even though the fees listed in the Florida statutes are presumably reasonable, the ambiguity of the fee agreement made it unenforceable and the attorney’s representation to his co-trustee that the statutory fees were required was a breach of fiduciary duty.

See Jeffrey Skatoff, Attorney Fee Computed Under Probate Code Schedule = Breach of Fiduciary Duty, Clark Skatoff, Nov. 5, 2014.

November 5, 2014 in Estate Administration, Estate Planning - Generally, New Cases, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Friday, October 31, 2014

$44 Million Legal Bill Upheld

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The top appeals court in New York has granted a $44 million bill for legal work that lasted less than five months, rejecting an argument that lawyers for a real estate entrepreneur’s wealthy widow had a “Svengali-like influence” on her.

The New York Court of Appeals also ruled that Graubarb Miller lawyers do not have to return $5 million in gifts they received from Alice Lawrence, saying this claim was made too late.

Taken up by Alice Lawrence’s estate after her death in 2008, the battle over the $44 million legal bill concerns a contingency-fee arrangement that she entered into with the Manhattan law firm.  The battle centered around the executor of her husband’s estate and control of his real estate holdings. 

In hopes of saving money, Lawrence agreed to pay the firm 40 percent of any future recovery.  Within five months, the litigation settled for $111 million.  Flabbergasted at paying Graubard the $44 million fee, new litigation ensued.

Yet, in reversing the Appellate Division ruling, the Court of Appeals said Lawrence was bound by the agreement, “She was a competent and shrewd woman who made a business judgment that was reasonable at the time, but which turned out in retrospect to be disadvantageous.”

See Martha Neil, Top NY Court Says Widow’s Estate Must Pay Lawyers $44M for Less Than Five Months’ Work, ABA Journal, Oct. 29, 2014. 

October 31, 2014 in Estate Planning - Generally, New Cases, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 29, 2014

Conservative Strategist Ends Up with Shady Money

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Whitney Ball plays a large role in the conservative movement.  She controls DonorsTrust, a fund that has distributed more than $400 million to underwrite right-wing operations such as the National Rifle Association, the Heritage Foundation, and Americans for Prosperity.

Ball set up this fund fifteen years ago to act as a cashbox for wealthy conservatives who wanted to be sure their money would be used for conservative causes after they die.  The priority of DonorsTrust is to “safeguard donor intent.”

A few years ago, Ball became involved in an estate controversy when her father, a lawyer in Virginia, unethically handled the wills of three elderly people and Whitney Ball and her brother personally benefitted from his misconduct, with almost half a million dollars deposited into their bank accounts. 

According to the West Virginia Supreme Court of Appeals, which conducted a disciplinary proceeding regarding this matter, John Ball prepared wills for two octogenarian sisters. The court ruled that the “evidence in this case clearly established that Mr. Ball drafted three wills in which he gave himself excessive fees as an executor, drafted two wills that improperly conveyed property to himself and his wife, and assisted in changing a client's annuity to benefit" his children.

The court noted that Ball’s conduct was intentional and violated the rules of professional conduct.  Ball’s misconduct resulted in him receiving millions of dollars. The court annulled Ball’s law license and ordered he pay restitution of nearly $3 million to the three estates.  This amount included the money that went to his children. 

While Whitney Ball and her brother were not accused of wrongdoing or misconduct, the court acknowledged they did receive hundreds of thousands of dollars that had been transferred to them due to the unethical action of their father.

See David Corn, How a Top Conservative Strategist Ended Up With More Than $200,000 in Shady Money, Mother Jones, Oct. 27, 2014.

October 29, 2014 in Estate Administration, Estate Planning - Generally, Malpractice, Professional Responsibility, Wills | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 21, 2014

Lawsuit Over Handling of Holographic Will

Holographic will

An Austin lawyer and her firm have been sued by fifteen family members, alleging she failed to hire a handwriting expert to show their deceased matriarch’s will was forged and they should have received more from the estate. 

The lawyer representing the plaintiffs, William Robertson, commented, “My clients disputed it from day one.  The allegation against the lawyer in this case is that there should have been a careful expert examination of the handwriting.  That was not done.” 

The October 10 original petition and request for disclosure said the plaintiffs hired Holly Gilman and her firm to contest the handwritten will of decedent Carolina Torres.  A woman named Lisa Navarro offered the will for probate.  Gilman contested the will, arguing it “was fabricated and provided that Lisa Navarro was to receive the largest portion of the assets of the estate of Carolina A. Torres.”  At the will contest hearing, no expert testimony was provided, rather writing samples were utilized. 

The court ruled against the plaintiffs and found the will to be valid.  The plaintiffs subsequently hired a new lawyer and continued to probate the case.  The court then made a final ruling and distributed assets in accordance with the will.  However, Robertson noted that the “distribution in the will was real lopsided.”   

After a handwriting expert was hired, the plaintiffs became aware that the holographic will of Carolina A. Torres was forgery and that Lisa Navarro had perpetrated fraud.  The plaintiffs are now suing for negligence, gross negligence and breach of contract.

See Angela Morris, Handling of Handwritten Will Lands Lawyer In Legal-Mal Lawsuit, Texas Lawyer, Oct. 17, 2014.

October 21, 2014 in Estate Administration, Estate Planning - Generally, Malpractice, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Friday, October 3, 2014

Fiancee's Suit Sinks for Lack of Privity

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Despite a $250,000 judgment at trial, the fiancée of a deceased postal worker came up short in the District Columbia Court of Appeals, based on lack of privity between her and the lawyers who mismanaged the decedent’s divorce. 

In Scott v. Burgin, the fiancée and the decedent had lived together for years, and he filled out forms to make her the beneficiary of his Post Office retirement benefits.  In January 2006, the fiancée met with a lawyer and asked him to take care of decedent’s divorce from his wife, while also discussing the pension issue with him. 

Almost two years later the lawyer served a divorce complaint on decedent’s wife.  However, when decedent died in April 2008 he was still married, and therefore the Post Office denied the fiancée’s claim to survivor benefits, which went to decedent’s wife. 

Reversing the trial court, the court of appeals held that the fiancée lacked standing and was not within the lawyer’s “ambit of care.”  The court further stated that lawyers have duties to their clients, not to third parties.  The take away from this case is to recognize that a lawyer has a duty of care that can extend beyond those strictly in privity with the lawyer-client contract.  Because jurisdictions differ, it is important to evaluate and analyze your risk of exposure to claims from third parties.

See Karen Rubin, Lack of Privity Sinks Fiancee’s Suit Against Divorce Lawyer, The Law for Lawyers Today, Sept. 25, 2014. 

October 3, 2014 in Estate Administration, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 10, 2014

Judge Gives Nine Year Sentence for Insider Trading

Martoma

On Monday, Judge Paul Gardephe handed down one of the longest prison sentences for insider trading.  Mathew Martoma, the portfolio manager who worked for an affiliate of Steve Cohen’s SAC Capital Advisors hedge fund firm, was found guilty of obtaining material non-public information about the development of an Alzheimer’s drug from a doctor and trading the information to make more than $200 million in profits.  The judge sentenced Martoma to nine years and ordered that he pay back the $9 million he received in bonuses for himself. 

The evidence accrued against Martoma was large, including the testimony of an 81-year-old doctor.  Although some lawyers and reporters were baffled by Martoma’s decision not to settle the case, some suggest his ability to obtain a good settlement was hindered after it was discovered he had been expelled from Harvard Law School for doctoring his transcript to make up better grades. 

See Nathan Vardi, Mathew Martoma Sentenced to Nine Years For Insider Trading, Forbes, Sept. 8, 2014.

September 10, 2014 in Estate Planning - Generally, Malpractice, New Cases, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Sunday, September 7, 2014

The Ethical Side of Asset Protection Planning

Asset protection

Many clients are concerned with safeguarding their wealth during their lifetime, also known as asset protection planning (APP).  APP goes beyond traditional estate planning, and focuses on minimizing estate and inheritance taxes, avoiding probate and providing for heirs.  Accordingly, estate planners are expected to have knowledge of asset protection stratagems, including the use of asset protection trusts (APTs).  Many practitioners avoid APTs, fearing this is unethical.  However, that fear unfounded as it is usually based on lack of knowledge in the area.

Attorneys must examine cases and ethics opinions of the state in which they practice as individual states take slightly different approaches to what constitutes ethical representation.  All states have statutory provisions exempting certain assets from creditors’ claims, and more than 15 states have enacted domestic asset protection trust (DAPT) legislation.  This legislation supports the position that APP is ethical.  Even though APP is ethical, it can be practiced unethically.

The key to an ethical practice is to know your client and state laws.  Once you have determined whether a client may be represented in an APP matter, you must avoid communication failures, especially allowing unreasonable client expectations. 

See Patricia Donlevy-Rosen, Ethical Considerations in Asset Protection Planning, Wealth Management, Sept. 3, 2014.

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

September 7, 2014 in Estate Planning - Generally, Estate Tax, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 2, 2014

Article on Discretionary Distributions

Leslie kiefer aman

Leslie Kiefer Amann (Sentinel Trust Company LBA) recently published an article entitled, Discretionary Distributions: Old Rules, New Perspectives, Estate Planning and Community Property Law Journal, Vol. 6 No. 2, 181-220 (2014).  Provided below is a portion of the article’s introduction:

The “discretion” exercised by a trustee includes all aspects of administration, but making payments out of a trust—the discretionary distribution—often seems to be the greatest challenge.  This material was originally created for the Texas Bankers Association Annual Graduate Trust School.  Over a period of nearly fifteen years, it has been gradually expanded to include illustrations and materials from other states; however, the primary focus remains on the information needed to make excellent fiduciary decisions and draft clear fiduciary instructions under Texas law.

Although many of the citations are to Texas law, some principles are universally applied, and regarding those, this article will draw on the case law of other states and sources. 

September 2, 2014 in Articles, Estate Administration, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)