Taxation & Estate Planning

More on Ethics and Estate Planning

By Joel A. Schoenmeyer

One of the cases mentioned at the ethics seminar I attended yesterday involves an Illinois attorney named Karris A. Bilal. Mr. Bilal was facing disciplinary action for a number of reasons. One of the reasons involved his actions with respect to his father's wife, Rachell, and Rachel's aunt, Georgia Hodges. From the ARDC Review Board's Decision:

... Bilal drafted a separate document, a Durable Power of Attorney (2004 DPOA). Bilal gave the unexecuted 2004 DPOA to Rachell, who had it executed on June 30, 2004. The 2004 DPOA gave Rachell broad powers to deal with Hodges's property, including the power to make gifts of Hodges's property and to sell real estate owned by Hodges. This power expressly included the house in which Hodges was living, which was being sold....

Bilal also prepared a living trust, similarly dated June 30, 2004, in which Hodges appointed Rachell as trustee. Rachell signed this document for Hodges pursuant to the power of attorney. Hodges's property was placed in the trust. Under the terms of the trust, the trustee was to pay the grantor any trust income or principal the grantor requested during her lifetime. Upon the grantor's death, the trustee was to give the grantor's tangible personal property to charity and distribute the remainder of the trust in equal shares to Hodges's brothers and sisters, Rachell, and Rachell's son.

Bilal also prepared a warranty deed for the sale of Hodges's home. Hodges signed the deed on July 1, 2004. Hodges was not present at the closing. Rachell signed Hodges's name to the documents signed at the closing. Bilal represented the seller at the closing and received attorney fees of $5,000. The house was sold for $240,000. Bilal did not advise Rachell concerning the proceeds of the sale of Hodges's house.

The crux of the problem here is this:

Bilal did not meet with Hodges before preparing the 2004 DPOA, the trust, or the deed. He did not attempt to determine whether Hodges had capacity to sign those documents or whether doing so was in her best interests. Other evidence presented at hearing, including testimony from Dr. Veres, indicated that Hodges had dementia as of at least January 2003 and would not have been competent to sign the documents. Bilal did not give Hodges any advice concerning the documents.

The issue goes to what I was saying yesterday. Who's the client? It should have been Hodges, but Mr. Bilal acted as though it was Rachell. For that reason, and others, Mr. Bilal is suspended from practicing law for 18 months.

Full post as published by Death and Taxes Blog on May 01, 2009 (boomark / email).