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California Living Trusts | Nonlawyers, Lawyers and Ethics Problems

Living Trusts Estate Misconduct.jpgIt's late afternoon. Jack sits in his favorite chair. It gives him a good view of his backyard - a good look at the birds that visit. He can see the TV from where he sits. His phone is on the table next to him.

Jack is not worried about work. He retired from his federal job twenty years ago. Now in his mid-80s, he lives alone. His wife Sue died more than two years ago.

It's hard. Jack's lonely. Sometimes he feels confused. He can't remember the names of his neighbors and some of his old work buddies. Jack, like many of America's elders, is getting more and more unsolicited phone calls. Jack's son warns him that some calls - many calls - are robocalls.

Robocalls have prerecorded messages as if they come from a robot. A real human comes on the line if Jack says something. All this doesn't make sense to him. The phone rings.

It's Bob from Cayman National Life. Bob sounds nice. Bob explains that he helps people get wills, trusts and other estate planning tools in order. Bob can do all this with just a home visit. Jack thinks that's fine.

Bob is not an attorney. Bob visits Jack the next day. He explains how he is a financial planning professional who can handle all Jack's needs. Jack signs a Cayman National Life contract for the creation of a living trust, a power of attorney and a health care directive. Bob secures a payment of $2600 from Jack. Bob fills out forms listing all of Jack's financial and personal information.

Bob goes back to his office. The forms' information is shared with one of Cayman's panel attorneys from the geographic area where Jack lives. The panel attorney drafts documents for the plan that Jack paid for. The panel attorney calls Jack for a short conversation about the plan. The panel attorney gets a flat $400 for drafting the plan. The documents are sent back to Bob, the Cayman agent.

The panel attorney never talks to Jack again. Bob again visits Jack, this time with the documents that the panel attorney prepared. Jack signs the documents. Bob explains little other than that the Cayman plan is "a good plan." Cayman later provides Jack with a copy of the executed plan.

Jack dies later that year. Jack's son discovers the Cayman estate planning documents in Jack's desk. The beneficiaries named in Jack's trust are strange - people that Jack barely knew. Jack's son seeks counsel. We respond.

We first note that Bob and Cayman are probably practicing law without a license. The nonlawyer sales representative, Bob, meets with customers, fills out forms, and shares the fee with a lawyer ($400 of $2600).

It's basic law that a person not admitted to practice as a lawyer may not engage in the unauthorized practice of law and a lawyer may not assist a person to do so. Lawyers are duty-bound to provide adequate supervision to nonlawyer employees and agents.

Many states have held that unlicensed enterprises using laypersons and associate with lawyers as a means to superficially legitimize sales of living-trust packages are engaged in the unlawful practice of law. Licensed lawyers who facilitate these sales efforts violate professional standards of competence and ethics.

Circumstances like those described present immense ethical problems for California lawyers, among them -

  • Duty to have a written contract;
  • Duty to avoid actual and potential conflicts of interest;
  • Duty to maintain confidentiality;
  • Duty to perform services competently and diligently;
  • Duty to avoid third party interference with the attorney's independent judgment; and
  • Duty to communicate with your client.

Further inquiries in situations like these are whether:

  • (1) The attorney drafter failed to accomplish the settlor's intent;
  • (2) whether the attorney failed to investigate heirs and assets;
  • (3) whether the attorney allowed execution of the estate planning documents when the settlor or testator lacked testamentary capacity; and
  • (4) whether the attorney failed to make appropriate inquiry as to whether the estate plan was formed as a result of undue influence.

Jack's son will challenge the documents sold to Jack by Cayman and prepared by Cayman's panel lawyer. California litigation will ensue.

Jack's circumstances are not unique to him. Elders across the country are solicited by companies to create a one-stop living trust plans - plans with nice bindings - plans often like a cookie-cutter - similar to thousands of others - and prepared with little or no attorney-client communication.

Hackard Law represents clients in most of California's major urban areas including Los Angeles, San Mateo, Alameda, Contra Costa and Sacramento Counties.

We take substantial cases in estate, trust and financial elder abuse litigation where we think that we can make a significant difference and there are wrongdoers who can be made financially accountable for their wrongdoing. If you would like to speak with us about your estate or trust case, call us at 916 313-3030.

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