Rest in Peace. Another young celebrity cut down by drugs in their prime.

This post is off topic, but I think it merits a discussion in case there are any attorneys out there who still don’t know about this.  The issue is scam emails that make the promise of you earning a legal fee for a small amount of work, but are really targeting your IOLTA account.

These scams target attorneys and they work like this.  The attorney will receive an email from a potential client who needs assistance in some sort of a debt collection or enforcement matter.  The context will be a debt collection case, or a family court order enforcement case, an estate matter, or any other type of case you can think of where the attorney will demand a third party to make a payment to his client pursuant to a contract. 

If you get one of these emails, it can be difficult to tell straight off that you are dealing with a scammer.  If you respond to the email, you will probably immediately be sent documents that support the claim to be made.  In the family law context you will receive a family court order stating that money is to be paid to your client; in the debt collection context you will receive a contract and possibly a demand letter to be sent.

The scam continues as follows. The attorney will make a demand on the third party, and low and behold will receive in the mail a check payable to the attorney in the amount of the claim.  The attorney will deposit that check into the IOLTA account as required. Then the client will request the funds to be wired to his/her account, while the attorney retains a portion of the proceeds as the legal fee.  It is not until days later that the attorney’s bank discovers that the check was fraudulent. 

The attorney is then in lots of trouble as the missing funds need to be replaced, and if any valid instrument has been denied payment by the bank for non-sufficient funds, the attorney is going to be reported to the bar association. These scams are remarkably sophisticated, and small firms and big firms alike have fallen prey to them.  I have even seen some scams that try to make you feel like you are working with another attorney on the matter, ie, that attorney is in the state where the client is but obviously needs to hire you as local counsel, but it is all part of the scam.

How does an attorney protect against this? First, never wire funds out of your escrow account in this manner unless you are certain the funds are collected, or you have no doubt that the available funds will be collected.  There is a difference between funds being available and funds being collected. Second is to avoid the situation of having to deposit such funds into your IOLTA account.  If you accept this type of case, do so only if the client pays you upfront.  This way, you will not have to deposit funds into your IOLTA account in order to be able to receive your fee.  I was able to sniff out a scammer who was trying to tell me they were owed hundreds of thousands of dollars pursuant to a contract, but would not pay me a small retainer fee to get started.  Third, if you do receive a certified bank check and are in doubt as to the authenticity of the check, enlist your own bank to help make a determination as to the authenticity of the check. A phone call to the payor bank can confirm whether the check is a forgery or not. (But do not just call the telephone number printed on the check, if the check is forged, rest assured that number is fake as well.)      

First off, this Yankees fan would like to say thank you to George Steinbrenner for his successful stewardship of the New York Yankees over the past several decades.  RIP The Boss.  As a friend of mine said, somewhere in heaven Thurman Munson, Billy Martin, and George Steinbrenner must be having their long-awaited sitdown.

Now to blog business.  From a purely estate tax point of view, George Steinbrenner picked a pretty good year to pass on. There is no federal estate tax this year. The estate tax savings can be measured in the hundred’s of millions of dollars, considering a net worth north of one billion dollars.  I believe The Boss was domiciled in Florida, a state with no state estate tax, which results in additional estate tax savings.   On the other hand, The Boss may have owned some real property in New York, a state that can take a fairly good bite out of an estate with its estate tax.  But with no really good information as to his holdings and estate plan, it would be mere speculation to estimate what the New York estate tax might be.

It is more interesting to think about the possibility that  (Click here for more…)

Well, we are almost through one half of the year 2010, and there is not much news to report on what will happen to the federal estate tax. As you may know, pursuant to the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), there is no federal estate tax in 2010. There is also no estate tax in South Carolina this year, as has been the case since January 1, 2005.

In December 2009, the U.S. House of Representatives passed a tax bill that would make the 2009 federal estate tax law permanent, thus locking in the 3.5 million dollar per person estate tax exemption and 45 % top tax rate. The Senate never took up this bill. There has been some political rangling in the Senate lately, but Democrats are unwilling to take up a bill unless they are fully confident they can get a floor vote.  The reasons for this are beyond the scope of this post, but suffice to say that political rangling is preventing new federal estate tax legislation.

With the possibility of a double dip recession looming, the oil spill that will not end, and mid-term elections coming up that may dramatically alter the make up of Congress, one wonders whether anything will happen on this issue. 

What is interesting is what will happen to South Carolinians (Click here for more…)

In Verenes v. Alvanos, (Op. No. 26780, S.C. Supreme Court, filed March 1, 2010), the South Carolina Supreme Court took up the right to jury trial in Probate Court. The case involved claims made against a trustee for breach of fiduciary duty of care, breach of fiduciary duty of loyalty, and for an accounting.The various reliefs requested were for surcharge of the trustee, disgorgement of commissions and profits, and for an account. The trustee sought a trial by jury, the probate court denied his request. Here’s why.

The U.S. and S.C. Constitutions hold the right to jury trial in high esteem, the right is a fundamental one. However, you are not entitled to a jury trial in all cases. The right to trial by jury attaches to actions at law. However, the right to trial by jury does not attach in cases in equity. An action at law is typically a case for money damages. An action for a breach of fiduciary duty is typically an action in equity, however, the court notes that it has been held that an action for breach of fiduciary duty could also be an action at law.

How do you draw the distinction? The Court looks to the remedies requested. In this case, the remedies sought included surcharge, disgorgement, and an accounting. These remedies fall squarely within the equity jurisdiction. Equity jurisdiction does not support a request for a jury trial. Thus, no right to a jury trial for the appellant here.  

Lately I have found myself fascinated by the recent repeal of the federal estate tax and all of its consequences, intended or otherwise. Equally fascinating are the proposals that have been made by members of Congress to reinstate the estate tax.

One such proposal is to ressurect the estate tax for 2010 at 2009 levels, and to make the federal estate tax exemption portable between spouses. This is an interesting proposal in that theoretically this would eliminate the need for a credit shelter trust to accomplish estate tax planning for a married couple. In a typical planning scenario, the credit shelter trust is funded by assets owned by the first-to-die spouse and is funded up to the exemption amount, and all other assets are placed into a qualified terminable interest property (QTIP) trust for the sole benefit of the surviving spouse. This is done because if all the assets of the first-to-die spouse are transferred to the surviving spouse, the first-to-die spouse’s exemption amount is totally wasted, and a much larger estate tax becomes due at the end of the surviving spouse’s lifetime.     

The portability of the exemption would allow whatever exemption amount that is unused in the first-to-die spouse’s estate to be transferred to the surviving spouse’s estate.  Wouldn’t that be great? The proponents of portability say that this would eliminate the need for the credit shelter trust, thus reducing complexity and the financial burden of estate planning. Good intentions of course, but where again does that road paved with good intentions lead?

Experienced estate planners can instantly recognize the complexities that exemption portability would create.  Number one, what about multiple marriages? (Click here for more…)

Congratulations to Scott Brown, Esq., the new Senator-Elect for the State of Massachusetts.  By all accounts, Mr. Brown is a nice hard-working family lawyer turned politician who has an ability to connect with voters, and was willing to do the work in the trenches during the campaign to win the election. 

Knowing full well that I am being naive, somehow I hope that this election will bring some bipartisanship back to politics in D.C. The people’s business is important, from the health care reform bill to the inexplicably muddled state of the estate tax, to figuring out how to create an economic environment that gets people back to work. I hope the two parties can begin to work together again on these issues. But then again, I may have to rename this blog the South Carolina Naive Lawyer Blog.