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.
Wednesday, December 9, 2015
Robert Barton and Wendy Walker recently published an article entitled, Alternative Litigation Finance: Part 2 -- The Ethical Do’s and Don’ts: Best Practices When Clients Finance Fiduciary Litigation, Probate & Property Magazine: Volume 29 No. 6 (2015). Provided below is an abstract of the article:
Alternative litigation finance (ALF) is an arrangement between the client and a third-party company under which the company funds litigation fees and costs up front in exchange for a fee. Although these companies have existed in the personal injury and commercial litigation fields for decades, it was not until relatively recently that these companies expanded with a focus on trust and estate litigation.
Richard C. Mills recently published an article entitled, Doing Good, While Doing Right by Your Client: A Guide to Ethical Considerations for Estate Planning Attorneys Serving on Charitable Boards, Probate & Property Magazine: Volume 29 No. 6 (2015). Provided below is an abstract of the article:
Many estate planning attorneys find serving on charitable boards to be one of the more gratifying aspects of their practices. Charitable organizations typically are eager to have attorneys on their boards. As a director or trustee, an attorney is often looked to, not only for her expertise, but also as a valuable connection to potential donors and other grant makers in the community. Because many small charities have little experience with planned giving vehicles beyond simple bequests, it is not uncommon for estate planning attorneys serving on charitable boards to assist small charities in developing a planned giving strategy.
Wednesday, November 18, 2015
This journal column discusses an article written by Robert F. Hurley that was published in the September 2006 issue of Harvard Business Review titled “The Decision to Trust.” There are a number of different factors that relate to whether people will trust one another. These factors are the result of a complex mix of personality, culture, and experience. The individual person or situation is another factor that can influence trust. A current research survey of 1,000 clients of financial advisers led by Julie Littlechild shows that there is a very high level of trust. There are a number of things that advisers can do and communication techniques they can use to move the needle on trust. There are a wide range of positive outcomes that are associated with a high level of trust.
See Marie Swift and Julie Littlechild, Building Trust Through Communication, Journal of Financial Planning, November 17, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
Thursday, November 12, 2015
A judge in Maine has been accused of creating an intentional backlog of cases in his probate court in order to retaliate against the county board that denied him a large pay raise. The court had no prior backlog of cases until the judge switched his schedule, allegedly to get more paid holidays, after his request for the raise was rejected. Wait times for name changes and probate have more than doubled in almost all circumstances with adoptions going from a 90 day maximum wait to over 6 months. The judge has a history of professional responsibility violations with him being cited numerous times by the Maine Supreme Court including for violations related to his work as a judge. No word yet on if sanctions will be applied.
See Scott Dolan, Judge denied big pay raise retaliated by causing backlog, York County officials say, Portland Press Herald, November 9, 2015.
Special thanks to Deborah Matthews for bringing this article to my attention.
Sunday, November 8, 2015
This column discusses some of the tenets that "movement" firms should adopt. In today's technologically-driven society customers are not looking to buy time, but are instead looking for solutions to their problems. Successful firms need to think about how they can best provide for their client's needs. A firm will want to change the way it values and prices its own services. Coming up with a new value-based pricing system will require a modification in the business culture of the entire company. This article points out the steps firms will need to take to stay ahead of the game in adopting a value pricing system. Transitioning to a value pricing in a business will require careful planning and the first few months may be difficult.
See Jody Padar, Value Pricing: Is Your Firm Ready?, Accounting Today, November 6, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
Wednesday, November 4, 2015
A women set up a trust that made her and her son life beneficiaries with a remainder interest to her son and daughter. However, a dispute arose over the trust which resulted in the son, while acting under a power of attorney, to seek assistance from attorneys which represented both the son and mother in changing the trust. As a result, disciplinary authorities were called in to investigate potential conflicts of interest by the attorneys in their dual representation but the attorneys were absolved by the board.
In In Re Szymkowicz, the D.C. Court of Appeals ruled that there was substantial risk of conflicting interest by the attorneys representing both the mother and son. It was held that even if two family members’ interests are “generally aligned,” there can be significant risk of later conflict so informed consent is required. The court did not make a determination if there was informed consent given for the dual representation and remanded the case back to the disciplinary board to make the determination.
Special thanks to Karen E. Boxx for bringing this case to my attention.
Wednesday, October 14, 2015
The Financial Industry Regulatory Authority (FINRA) is introducing new rule proposals that would let financial advisers pause orders if they suspected there to be any financial exploitation of senior investors. The proposed regulation notices would assist member firms in protecting elderly clients that have diminished capacity. One of the proposals creates a 15-day "safe harbor" period where advisers can hold disbursements into senior customer accounts if they suspect that fraud is taking place. Another proposal being released would require firms to obtain the information on trusted contacts belonging to the accounts of senior investors. A "senior investor" is any person that is 65 or older, or there is any other evidence of vulnerability. There has also been growing interest in congress for some federal legislative proposals in this area.
See Megan Leonhardt, FINRA Rolling Out Rules To Prevent Elder Financial Abuse, Wealth Management, October 13, 2015.