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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. Indianapolis employers harassment among minorities AFRICAN Americans needs to be discussed the metro Indianapolis area is horrible when it comes to harassing African American employees especially in the local healthcare facilities. Racially profiling in the workplace is an major issue. Please make it better because I'm many civil rights leaders would come here and justify that Indiana is a state the WORKS only applies to Caucasian Americans especially in Hamilton county. Indiana targets African Americans in the workplace so when governor pence is trying to convince people to vote for him this would be awesome publicity for the Presidency Elections.

  2. Wishing Mary Willis only God's best, and superhuman strength, as she attempts to right a ship that too often strays far off course. May she never suffer this personal affect, as some do who attempt to change a broken system: https://www.youtube.com/watch?v=QojajMsd2nE

  3. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  4. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  5. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

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