Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Saturday, December 13, 2014

Trust Administration Planning

Trust administration

A trust is a common structure utilized to realize widely recognized and accepted freedom of disposition.  The law of trusts permits the grantor to set forth a private law that both permits and restricts the use of property for the benefit of two or more people, either simultaneously or in succession. 

While trusts are an effective vehicle for wealth management, there is room for disagreements about “who gets how much and when.”  Whatever benefits a trust may provide, conflicts can offset those gains and inflict a burden on the management of the wealth subject to the trust.  Thus, in order to minimize burdens that may result in litigation, every trust should have an administration plan.

A trustee has four rudimentary tasks: to secure and protect the trust assets; invest the trust assets; make distributions to the beneficiaries; and keep records, file tax returns and meet compliance obligations.  The trustee is subject to the highest levels of fiduciary duties, and often come into focus when a dispute arises between the trustee and one or more beneficiaries.  Accomplishing the trustee’s basic tasks may be more complex. 

When an individual trustee takes on a new trust, it is helpful to exercise to follow the common corporate trustee practice of creating a “head sheet.”  The head sheet contains a summary of the key provisions and elements of the trust, including grantor, current and successor trustees, current and successor beneficiaries, remaindermen, purpose and goals tax status, etc.  As part of the trust administration plan, the head sheet should be reviewed and updated.  The significant elements of any trust administration will change over time. 

See Joseph C. Mahon and Patricia Angus, Planning Trust Administration to Avoid Conflicts, Wealth Management, Nov. 21, 2014. 

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

December 13, 2014 in Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, November 24, 2014

Beware of Trust Mill Peddlers


There is no shortage of non-attorneys willing to give advice about estate planning, and this advice is often give for the non-attorney’s own financial gain. 

In Michigan, the State Bar has received numerous complains regarding estate plan salespersons practicing law without an attorney license by giving advice.  The Michigan Attorney General has received complaints of deceptive sales practices by annuity and life insurance peddlers.  The Michigan Office of Financial and Insurance Services has acquired similar complaints.

The peddlers use two primary schemes to access you and your money.  The first is a free lunch or dinner presentation under the semblance of providing estate planning or other information.  The second is the home visit brought about by a lead card mailed to you offering free estate planning information that you fill out and mail back to them.  Some use a combination of the two. 

Peddlers try to sell you a trust plan without knowing your situation or your assets and income.  Frequently, they say you do not have to pick and choose what you want in your estate plan because they know what you need and will provide it.  This is very common with trust mills.  They have a single trust form, allowing them to prepare so many trusts in one year. 

So, how do you protect yourself from the trust mills?  Of course, be on guard and on the lookout.  Use reputable and knowledgeable estate planning, investment, insurance and tax professionals in order to plan for the future accordingly.

See Matt Wallace, Trust Mill Peddlers Are Alive and Well, The Times Herald, Nov. 22, 2014. 

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

November 24, 2014 in Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Thursday, November 20, 2014

Griffin Industries Fiduciary Duty Case Going to Trial in May

Gavel2As I have previously discussed, a family feud over inheritance between the Griffin Industry heirs has four sisters pitted against three brothers. The sisters brought suit accusing their brothers of misappropriating their inheritance by transferring property the sisters were owed to the family company controlled by the brothers. Last week, a Federal district judge denied the brother's request that the September summary judgment ruling that found they breached their fiduciary duty to their sisters be reconsidered. A trial date has been set for May 5, 2015 and is scheduled to last four weeks. The brothers will present their affirmative defenses at the May trial.

See Andy Brownfield, Trial Set For Griffin Industries Family Legal Battle, Cincinnati Business Courier, Nov. 17, 2014.

November 20, 2014 in Estate Administration, New Cases, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 19, 2014

South Dakota Trustee Indicted for Fraud

TheftA 57-year-old South Dakota man has been indicted for multiple counts of wire fraud and money laundering, partially in connection with a scheme in which he stole funds from a disabled beneficiary of a trust that he was trustee of. Randall William McKee is accused of transferring funds from the trust to his business and then transferring the funds from the business to his personal bank accounts. McKee's trial is scheduled for January of next year.

See U.S. Attorney's Office, Sioux Falls Man Charged With Fraud and Money Laundering, FBI, Nov. 10, 2014.

November 19, 2014 in Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, November 17, 2014

JP Morgan Resolves Trustee Dispute


JP Morgan Case & Co. settled a lawsuit by Texas mineral rights owners who accused the company of cutting deals with oil company clients to cheat them out of $691 million in compensation.  The dispute centered around payments for rights to drill in Eagle Ford, a shale formation underlying central and southwest Texas that has helped put the U.S. in competition with Saudi Arabia and Russia for title of the world’s largest oil producer. 

Beneficiaries of the South Texas Syndicate Trust accused the bank (who were supposedly working on their behalf) of instead concocting advantageous deals with commercial-banking clients Petrohawk Energy Corp. and Hunt Oil Co. for cut-rate prices on the trust’s rights in Eagle Ford. 

“The case was resolved with some conditions, and the jury was excused,” a lawyer for the trust beneficiaries said.  “[A] sufficient number of beneficiaries will sign the accord at their annual meeting in San Antonio this weekend.”  Although an agreement was reached without disclosing the terms, the beneficiaries would receive $40 million from the bank. 

JP Morgan denied claims of “self-dealing,” claiming the plaintiffs’ allegations were based on the benefit of hindsight.  “A trustee’s dueties and responsibilities are not to be judged by hindsight.  There’s not Monday-morning quarterbacking.”

See Margaret Cronin Fisk and Laurel Brubaker Calkins, JPMorgan Settles Claims It Cheated Shale-Rights Owners, Bloomberg Businessweek, Nov. 16, 2014. 

November 17, 2014 in Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Friday, November 14, 2014

New Jersey Attorney Facing Prison After Stealing From Elderly Clients

JailNew Jersey attorney Barbara Lieberman was charged in March for taking control of financial accounts and stealing funds from her elderly clients. Lieberman was accused of forging documents to make herself power of attorney over clients and adding her name to their bank accounts. Lieberman plead guilty to money laundering, and will face prison time at her February sentencing hearing, which according to the terms of her plea deal will be recommended by prosecutors to be a 10 year sentence.

See David Gialanella, NJ Lawyer Pleads Guilty to Robbing Elderly Clients, New Jersey Law Journal, Nov. 3, 2014.

November 14, 2014 in Current Events, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

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


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)