Wills, Trusts & Estates Prof Blog

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

Tuesday, June 13, 2017

Fiduciary Rule Fight Brews While Bad Financial Advisors Multiply

LaborCurrent research has confirmed serious problems with the manner in which Americans receive their financial advice. The financial industry, despite great strides, is still struggling with large numbers unscrupulous advisors. The Fiduciary Rule, set to take effect earlier this year, was designed to alleviate some of these issues. Donald Trump, after taking the presidency, ordered the Department of Labor to reconsider the rule. Lack of support for more regulation and a general concern with potential side-effects by the President is also mirrored in Congress. Given the outlook of the new administration, the adoption of the rule, especially in its original form, is doubtful. Objectively, the rule is certainly not a fix-all solution and its passage does entail some possible negative repercussions. But, regardless of outcome, the financial field remains rife with malcontents and miscreants. The average firm employs around 8% of advisors that have a record of serious misconduct. Of this 8%, nearly half of them keep their jobs even after being caught. Even worse, nearly 38% of the misbehaving advisors go on to do more harm to other clients. Though the Fiduciary Rule may be controversial and uncertain, what is certain is that industry changes must be made in order to repair and sustain an image of professionalism and trust in financial advisors.

See Ben Steverman, Fiduciary Rule Fight Brews While Bad Financial Advisors Multiply, Wealth Management.com, June 7, 2017.

June 13, 2017 in Current Events, Estate Planning - Generally, New Legislation, Professional Responsibility | Permalink | Comments (0)

Thursday, June 8, 2017

The Legal Profession Is Failing Low-Income and Middle-Class People. Let’s Fix That.

AaEighty percent of low-income individuals in the US cannot afford needed legal assistance. Middle-income Americans fare little better with forty to sixty percent of their legal needs going unmet. Many of these individuals are forced to represent themselves in foreclosures, family disputes, and landlord-tenant disputes. Most are unprepared to navigate the complexities of the legal system. A possible solution to this problem is a legal model more reflective of the current medical hierarchy. Nurses, technicians, and pharmacists help provide aid to underserved communities and can reach populations that are inaccessible to most physicians. Allowing paralegals and others close to the legal system to take on more responsibility with minimal additional legal education could provide legal assistance to these underserved populations. Many legal tasks do not need to be performed by a licensed lawyer; adoption of a tiered system of legal-services lowers barriers to entry and may increase access to legal services.

See Jennifer S. Bard & Larry Cunningham, The Legal Profession Is Failing Low-Income and Middle-Class People. Let’s Fix That., The Washington Post, June 5, 2017.

Special thanks to Lewis Saret (Attorney, Washington, D.C.) for bringing this article to my attention.  

June 8, 2017 in Current Events, Professional Responsibility | Permalink | Comments (0)

Saturday, April 29, 2017

Article on Fiduciary Obligations of Funeral Representatives

Funeral repJames P. Spica recently published an Article entitled, Rights and Rites: Understanding the Fiduciary Obligations of Designated Funeral Representatives, 62 Wayne L. Rev. 185 (2017). Provided below is an abstract of the Article:

Michigan Public Act 57 of 2016 added a new operative, the “funeral representative,” to the cast of fiduciaries subject to Michigan's Estates and Protected Individuals Code. This Article canvasses the peculiarly fiduciary aspects of a designated funeral representative's power to make funerary decisions, focusing on the breadth of the funeral representative's discretion and the identity of the holders of rights correlative to the funeral representative's fiduciary duties.

April 29, 2017 in Articles, Current Events, Death Event Planning, Professional Responsibility | Permalink | Comments (0)

Sunday, April 23, 2017

Article on Fiduciary Duties in Social Enterprise

Fiduciary socialAndrew S. Gold & Paul B. Miller recently published an Article entitled, Fiduciary Duties in Social Enterprise, Cambridge Handbook of Social Enterprise Law (Forthcoming 2017). Provided below is an abstract of the Article:

This chapter examines theoretical and practical issues relating to fiduciary administration in social enterprise. It argues that social enterprise often calls for fiduciary administration on a hybrid model, combining elements of service-type administration and governance-type administration. Like standard service-type situations, social enterprise calls for administration in the interests of a defined constituency (ordinarily, shareholders). However, hybridity is introduced through the commitment to general public-oriented purposes that distinguish social enterprise from conventional business organizations. We will show that, contrary to common opinion, the fiduciary hybridity found in social enterprise is neither unique nor unworkable. We will briefly discuss other examples of hybrid fiduciary relationships and institutions, and we will explain the value of hybridity and how problems attributed to it are, or may be, resolved.

April 23, 2017 in Articles, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Friday, April 14, 2017

Personalizing the Client Experience

Personalize client experienceProactive personalization is often behind the scenes and based on the notion that the ideal service model is not right for everyone. Preferences for each individual client should be sought out for those important clients by asking narrow, service-related questions. These questions should be geared toward considerations like contact frequency, communication mediums, types of events, types of connections, and COI recommendations. Ultimately, a planner should start with the service model framework and then make small adjustments to personalize the communication.

See Stephen Boswell & Kevin Nichols, Personalize the Client Experience with These 5 Questions, Wealth Management, April 12, 2017.

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

April 14, 2017 in Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Wednesday, April 5, 2017

Article on the Duty to Inform After Dudenhoeffer

Duty to informRemy Grosbard recently published an Article entitled, The Duty to Inform in the Post-Dudenhoeffer World of ERISA, 117 Colum. L. Rev. 79 (2017). Provided below is an abstract of the Article:

The Supreme Court's 2014 decision in Fifth Third Bancorp v. Dudenhoeffer rejected a long-held presumption in the U.S. circuit courts that fiduciaries of employee stock ownership plans (ESOPs) act prudently in investing in company stock. Instead, the Supreme Court held, ESOP fiduciaries should be subject to the same duty of prudence as all ERISA fiduciaries, leaving ESOP fiduciaries vulnerable to plaintiffs testing the new standard.

To reduce the likelihood of suit from employees invested in employer stock, companies attempt to insulate themselves from liability by appointing independent fiduciaries. One way that plaintiffs, who may have suffered serious losses from downturns in their employer's stock, can still successfully assert breach-of-fiduciary-duty claims is by alleging that appointing fiduciaries have a duty to inform appointed fiduciaries of material nonpublic information that would adversely affect stock price.

This Note considers this claim and argues that courts should refrain from creating a per se rule against the duty to inform. Instead, courts should uphold such claims when securities laws would independently require disclosure. Principles of trust law, guidance from the Department of Labor, and the Supreme Court's holding in Dudenhoeffer support this proposal.

April 5, 2017 in Articles, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Tuesday, March 28, 2017

Article on Wills, Trusts, Guardianships, and Fiduciary Administration

SurveyMary F. Radford recently published an Article entitled, Wills, Trusts, Guardianships, and Fiduciary Administration, 68 Mercer L. Rev. 321 (2016). Provided below is an abstract of the Article:

This Article describes selected cases and significant legislation from the period of June 1, 2015 through May 31, 2016 that pertain to Georgia fiduciary law and estate planning.

March 28, 2017 in Articles, Estate Planning - Generally, Guardianship, Professional Responsibility, Trusts, Wills | Permalink | Comments (0)

Monday, March 27, 2017

Do Your Mutual Funds Have Exposure to Controversial Weapons?

WeaponsOver 6,500 funds that were sold to retail investors around the world have been found to have high exposure to controversial weapons, casting doubt over the asset managers’ efforts to invest responsibly. Specifically, the research reviewed the global mutual funds’ exposure to chemical and biological weapons, cluster munitions, white phosphorus, laser weapons, nuclear weapons, and several more. The research also found that 6,678 mutual funds had at least 5% of their portfolio invested in companies that either manufacture or distribute these weapons. Experts are worried that this callous way to make a profit will do nothing to restore trust in the financial services industry.

See Aime Williams, Mutual Funds Have Exposure to Controversial Weapons, Financial Times, March 26, 2017.

March 27, 2017 in Current Events, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (1)

Monday, March 20, 2017

Article on Fiduciary Law's Mixed Messages

Fiduciary law2Evan J. Criddle recently published an Article entitled, Fiduciary Law’s Mixed Messages, Research Handbook on Fiduciary Laws (Forthcoming 2017). Provided below is an abstract of the Article:

Nearly a century ago, Judge Benjamin Cardozo famously declared that fiduciaries bear a "duty of the finest loyalty" that is "unbending and inveterate" and "stricter than the morals of the marketplace." Some legal scholars argue today that Cardozo's uncompromising formulation of the duty of loyalty should be consigned to the ashbin of history because it does not accurately capture how courts enforce the duty in practice. Although courts routinely invoke Cardozo's famous dictum, they rarely hold that a fiduciary has violated the duty of loyalty absent an unauthorized conflict of interest or other flagrant abuse of power. To skeptics, these features of judicial practice suggest that Cardozo's moralistic rhetoric is a misleading distraction that should be abandoned in the interests of promoting precision and transparency.

This Chapter draws on republican legal theory to propose a fresh justification for the divergence between fiduciary law's strict requirements for fiduciary conduct and its more deferential standards for judicial review. Fiduciary law's "unbending and inveterate" legal requirements are necessary to affirm that fiduciaries lack authority to dominate their principals and beneficiaries. But courts should defer to fiduciary decisions in contexts where judicial intervention is more susceptible to arbitrariness—and, hence, more dominating—than fiduciary decision-making alone.

In particular, the degree of deference courts accord to fiduciary decisions should turn on two considerations:

(1) whether or not the fiduciary has been entrusted with discretionary power to decide the relevant issue; and

(2) whether the fiduciary or the judiciary is in a better position to resolve the relevant issue in a manner that tracks the principal’s purposes and the beneficiary’s best interests.

Guided by these considerations, the Chapter outlines a general framework for determining when courts should apply strong deference, weak deference, or de novo review to fiduciary decisions.

March 20, 2017 in Articles, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Monday, February 27, 2017

Article on the Rights & Duties of Homesteaders, Life Tenants & Remaindermen

Co-tenantGus G. Tamborello recently published an Article entitled, “A House Divided”: The Rights and Duties of Homesteaders, Life Tenants & Remaindermen, 9 Est. Plan. & Community Prop. L.J. 29 (2016). Provided below is an abstract of the Article:

Anyone who has dealt with decedent’s estates for any considerable period of time has likely confronted one or all of the following scenarios: 

  1. A. A person dies intestate owning separate and community property, leaving behind a surviving spouse, from a second marriage that does not get along with the decedent’s children from a previous marriage; 
  2. B. A person dies owning community and separate property, and the decedent’s will leaves it to someone other than a surviving spouse;
  3. C. A person either dies intestate leaving several surviving descendants or has a will devising property to the children or grandchildren in equal, undivided interests; 
  4. D. A person devises only a life-estate to someone, or a surviving spouse inherits a life estate in one-third of a real estate, and the remainder passes to individuals with whom the life-tenant does not get along. 

Each of these common scenarios give rise to competing interests, particularly concerning real estate and, more particularly, with respect to the homestead. This article will explore the often confounding relationship between the homesteader, the life tenant, or both, and the remaindermen or co-tenants. This article will also discuss the various rights and duties among them.  


February 27, 2017 in Articles, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)