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Indiana State Bar Association files new trust mill suit: Indianapolis company accused of unauthorized practice of law

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A decade ago, Vesser and Helen Davis met with an estate planning company representative about how to divvy up their assets and their Hamilton County farm.

That representative drew on a flipchart, illustrated ways a partnership and corporation could be set up, outlined differences between wills and trusts, explained the probate process, and advised the pair how they could arrange their finances and establish a corporate structure for the family farm business. In the end, they paid thousands of dollars for an estate planning package they thought would be best for the family.

The elderly couple thought the person they met with was an attorney.

He wasn't. Their estate planning purchase was secured with inadequate and invalid paperwork, forced them to pay out even more money to redo the documents, and the couple ended up losing out on a $4 million offer for their farmland that had been put into a corporation and would have meant double taxation if a sale had happened.

Now that company - United Financial Systems in Indianapolis - is the defendant in an action filed with the Indiana Supreme Court on Oct. 9, accused of operating a trust mill that engaged in the unauthorized practice of law and wrongly collected more than $1 million from at least five families throughout the state. While not common in Indiana, this type of trust mill action follows a string of similar actions seen in courts nationally as the country's population ages and companies look to cater to those growing estate planning needs.

The case is brought on behalf of the Indiana State Bar Association, which with the state Attorney General's Office and the Indiana Supreme Court's Disciplinary Commission are the only three groups allowed to bring unauthorized practice of law actions. Indianapolis attorneys Kevin McGoff and Rafael Sanchez with Bingham McHale are representing the bar association.

In the 36-page filing, the ISBA outlines the background of the 26-year-old United Financial, located on the northwest side of the city. The company advertises itself as providing "suitable estate & financial planning solutions" and selling estate planning documents that include wills, trusts, and powers of attorney. The company also sells securities and insurance products such as annuities.

According to the complaint, an estate planning assistant who is not a lawyer contacts and sells the services; that information is passed on to a licensed lawyer who contacts the client by phone and crafts the documents before returning them to United Financial for review and delivery to the client. The salespeople are encouraged to educate clients about the need for estate planning, and are specifically told, "not to apply any legal principles to a client's specific circumstances." The fee for a basic living trust is $2,495 while a will preparation fee is $695, according to the complaint.

A disclaimer on its Web site says that the corporation is not engaged in the practice of law and isn't a lawyer or law firm, though exhibits presented by the ISBA point out that clients had very limited contact with the licensed attorneys and most of the individuals who advised them were non-attorneys.

A total of five counts are made in the ISBA's action - one for each person or couple who bought into an estate planning package with United Financial.

One victim is a 78-year-old Allen County woman who never married. She had 12,000 shares of Exxon Mobile stock estimated in value at $520,000. A previous will from 1987 would have given her six nieces and nephew 200 shares each, while the remaining shares would be evenly divided between her brother and sister. The complaint details how United Financial advised her to liquidate her stock and purchase annuities in February 2002, which ended up with her relatives receiving $5,000 instead of the stock shares and her getting hit with more than $130,000 in tax liability.

For the Davis family, their decision revolved mostly around their Westfield farm that encompassed more than 80 acres. They started meeting with a United Financial representative in January 1997, and within a few months had paid $5,150 for document preparation and to create a limited family partnership for their family farm business.

"The Davises' estate planning documents were inadequate and contained provisions that are invalid in Indiana," the complaint says. "In addition, the corporate documents sold to the Davises and prepared by United Financial in 1997 were deficient and ultimately resulted in gain being subject to double taxation due to the corporate structure, which United Financial recommended and then established for them."

As a result, the Davises ended up paying the family attorney $8,336 to redo the estate planning and corporate documents prepared through United Financial, and they were unable to accept a $4 million offer for their farm because the corporate structure setup through United Financial would have resulted in double taxation.

Vess Davis died in January and won't see the result of this action, but the ISBA hopes United Financial will be permanently enjoined from continuing this practice. The bar association also requests the court order the company to reimburse about $1 million in fees collected for the unauthorized practice of law, and to consider ordering United Financial to release all the names and address of clients and other employees who might be affected by the court's decision.
 Attorney Ron Elberger with Bose McKinney & Evans in Indianapolis, who is representing United Financial along with attorney Peyton Berg, says the company has taken substantial steps in the past and presently to make sure they are complying with state law.

"That's occurring and is ongoing," Elberger said, declining to elaborate because of the current case. "They have engaged counsel to assist them by adjusting their program so they're in compliance with Indiana law. The company looks forward to the opportunity to present its case in court."

While not common in Indiana, this issue is one that courts across the country are addressing more frequently. One of the two unauthorized practice of law actions filed in Indiana in recent years - State ex. Rel Indiana State Bar Assoc. v. Northouse, 848 N.E.2d 668, 672 (Ind. 2006) - did have a trust mill component, McGoff said.

In Northouse, the court addressed a case where two northern Indiana men had been engaging in the unauthorized practice of law by advising people on wills, trusts, and other documents without having law licenses. In a per curiam opinion, the court stated unequivocally that preparing and drafting a will and advising others on the legal consequences of specific estate-planning decisions constitutes the practice of law.

"Taking an action like this is not a common action within the legal community, but it's an action that's essential to protect elderly citizens from this type of practice," said ISBA president Bill Jonas of South Bend. "This is a consumer protection issue, and one we have to address because the legal community is often called upon to clean up what took place in these actions." •    
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  1. Where may I find an attorney working Pro Bono? Many issues with divorce, my Disability, distribution of IRA's, property, money's and pressured into agreement by my attorney. Leaving me far less than 5% of all after 15 years of marriage. No money to appeal, disabled living on disability income. Attorney's decision brought forward to judge, no evidence ever to finalize divorce. Just 2 weeks ago. Please help.

  2. For the record no one could answer the equal protection / substantive due process challenge I issued in the first post below. The lawless and accountable only to power bureaucrats never did either. All who interface with the Indiana law examiners or JLAP be warned.

  3. Hi there I really need help with getting my old divorce case back into court - I am still paying support on a 24 year old who has not been in school since age 16 - now living independent. My visitation with my 14 year old has never been modified; however, when convenient for her I can have him... I am paying past balance from over due support, yet earn several thousand dollars less. I would contact my original attorney but he basically molest me multiple times in Indy when I would visit.. Todd Woodmansee - I had just came out and had know idea what to do... I have heard he no longer practices. Please help1

  4. Yes diversity is so very important. With justice Rucker off ... the court is too white. Still too male. No Hispanic justice. No LGBT justice. And there are other checkboxes missing as well. This will not do. I say hold the seat until a physically handicapped Black Lesbian of Hispanic heritage and eastern religious creed with bipolar issues can be located. Perhaps an international search, with a preference for third world candidates, is indicated. A non English speaker would surely increase our diversity quotient!!!

  5. First, I want to thank Justice Rucker for his many years of public service, not just at the appellate court level for over 25 years, but also when he served the people of Lake County as a Deputy Prosecutor, City Attorney for Gary, IN, and in private practice in a smaller, highly diverse community with a history of serious economic challenges, ethnic tensions, and recently publicized but apparently long-standing environmental health risks to some of its poorest residents. Congratulations for having the dedication & courage to practice law in areas many in our state might have considered too dangerous or too poor at different points in time. It was also courageous to step into a prominent and highly visible position of public service & respect in the early 1990's, remaining in a position that left you open to state-wide public scrutiny (without any glitches) for over 25 years. Yes, Hoosiers of all backgrounds can take pride in your many years of public service. But people of color who watched your ascent to the highest levels of state government no doubt felt even more as you transcended some real & perhaps some perceived social, economic, academic and professional barriers. You were living proof that, with hard work, dedication & a spirit of public service, a person who shared their same skin tone or came from the same county they grew up in could achieve great success. At the same time, perhaps unknowingly, you helped fellow members of the judiciary, court staff, litigants and the public better understand that differences that are only skin-deep neither define nor limit a person's character, abilities or prospects in life. You also helped others appreciate that people of different races & backgrounds can live and work together peacefully & productively for the greater good of all. Those are truths that didn't have to be written down in court opinions. Anyone paying attention could see that truth lived out every day you devoted to public service. I believe you have been a "trailblazer" in Indiana's legal community and its judiciary. I also embrace your belief that society's needs can be better served when people in positions of governmental power reflect the many complexions of the population that they serve. Whether through greater understanding across the existing racial spectrum or through the removal of some real and some perceived color-based, hope-crushing barriers to life opportunities & success, movement toward a more reflective representation of the population being governed will lead to greater and uninterrupted respect for laws designed to protect all peoples' rights to life, liberty & the pursuit of happiness. Thanks again for a job well-done & for the inevitable positive impact your service has had - and will continue to have - on countless Hoosiers of all backgrounds & colors.

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