Our mission is to expose and remedy corruption in the Probate Court of Cook County, Illinois. We assist, educate and enlighten families of the dead, the dying, the disabled and the aged to better understand their rights in order to protect themselves from the excesses of the Probate Court of Cook County. ProbateSharks.com is dedicated to networking the human element of people to people. We join together in reforming the corrupt Cook County Probate Court system.
Editor's note: This Shark witnessed the inaction of the Probate Court of Cook County, Judge Kawamoto when Alice R. Gore's daughter requested an investigation into two of Alice's safety deposit boxes. The boxes allegedly held 80 lbs of antique silver coins. The bank only stated that the boxes were owned by "others". What "others"? What happened to the fortune in coins? Lucius Verenus, Schoolmaster, ProbateSharks.com
Wyckoff Lawyer Charged With Theft
William E. Gahwyler was supposed to put $15,000 into a trust, but used the money for personal expenses instead, authorities said.
A Wyckoff attorney was charged with theft after he allegedly used thousands of dollars last year for “personal expenses,” authorities said.
William E. Gahwyler, 53, received approximately $15,000 from an attorney that was to be placed into a trust fund for a “landlord and tenant” matter, said Bergen County Prosecutor John L. Molinelli.
Gahwyler allegedly placed the money into his business account and used the money to pay for personal expenses, Molinelli said.
More from Wyckoff Patch
Gahwyler’s license to practice law was suspended in February 2013 for his failing to comply with ethics regulations, but he continued to practice anyway, authorities said.
Gahwyler was charged by members of the prosecutor’s office White Collar Crimes Unit Friday, authorities said. He was charged with theft by deception, misapplication of entrusted property, and unauthorized practice of law. (Pictured: William E. Gahwyler, 53/Courtesy of the Bergen County Prosecutor’s Office)
2015-03-23T23:25:00Z2015-03-29T14:04:03ZChildren win family dispute over Ladue man's $50 million fortuneBy Nicholas J.C. Pistor St. Louis Post-Dispatch stltoday.com
CLAYTON • A bitter family dispute over a real estate magnate’s millions culminated on Monday when a jury decided the man’s socialite widow used undue influence to gain control of his company.
The high-stakes drama has featured sensational allegations, a dash of Missouri political intrigue and a glimpse into the life of a wealthy Ladue family. It pitted the adult children of the late Robert Kaplan against their stepmother, Christine Murray-Kaplan, his widow.
The case featured St. Louis lawyer Catherine Hanaway, a former U.S. attorney and current GOP candidate for governor who is representing the children, against Robert Blitz, the man co-leading an effort to build a new NFL stadium in St. Louis, who represents Murray-Kaplan.
And in another twist, the defendant was a donor to and friend of the leading Democratic candidate for governor, Chris Koster.
The children — Michael Kaplan, Julie Salomon and Elizabeth Wright — painted Murray-Kaplan as a manipulative woman who schemed to turn her husband against his family and steer his extensive $50 million wealth into her control. Murray-Kaplan has denied their allegations, saying the children weren’t attentive to their father in the last years of his life — and that he himself made the final decisions about his assets.
Jurors were quick to side with plaintiff Michael Kaplan, Robert Kaplan’s son and the original primary trustee. After two hours of deliberation, jurors decided Murray-Kaplan used “undue influence” to cause her husband to effectively transfer ownership interest in his company, Kaplan Real Estate, to her control a few months before he died in 2013.
The approximate value of the company’s stock wasn’t known. The jury’s decision places the stock back into the trust. Judge Carolyn C. Whittington will decide later on a petition to invalidate amendments to Kaplan’s estate.
Russell Piccoli, a lawyer representing Kaplan’s children, argued Monday that Murray-Kaplan isolated her husband and used his failing health to force him to make changes to his massive trust while relegating him to their mansion’s guest house.
Originally, 90 percent of Robert Kaplan’s assets were set to go to his children. By the time he died, the trust had been amended to give his wife the 90 percent, and his children 10 percent. Piccoli said Murray-Kaplan desperately wanted to keep her lifestyle, which included private jets, a million-dollar wine collection and expensive clothes befitting a socialite.
Several jurors hugged Kaplan’s children after the verdict Monday. The children wouldn’t comment to a reporter, and neither did Murray-Kaplan as she quickly left the courtroom following the jury’s decision.
The couple married in 2001, after 15 months of negotiations over a prenuptial agreement, according to testimony. It was his second marriage and her third.
After the marriage, Piccoli said the children, one whose husband worked for Kaplan’s real estate company, went on Murray-Kaplan’s “hit list.”
He said she banished their pictures from their mansion and turned Kaplan against them.
Murray-Kaplan denied all of the claims.
St. Louis lawyer Steve Stone, who had represented Robert Kaplan for decades, testified that Kaplan eventually made amendments to his trust at Murray-Kaplan’s urging, giving her more wealth upon his death.
A lawyer for Murray-Kaplan said that was done because she was taking care of him while he was sick.
“She stayed with a difficult man for 12 years because love will allow you to endure the quirks of another human being,” said Christopher Bauman, a Murray-Kaplan lawyer, referencing testimony from several witnesses who depicted Kaplan as a gruff, quick-tempered man.
But Stone said Murray-Kaplan threatened her husband with divorce if he didn’t make the changes. Stone made notes to his file of her alleged “relentless yelling and screaming” over the amendments.
Stone, who had worked for Kaplan since the early 1980s, was eventually fired by Kaplan and replaced with new lawyers because Stone wanted to give more of the estate to the children, according to testimony.
The children alleged Murray-Kaplan forced her husband to live in the guest house of his sprawling Ladue mansion after he became ill in 2010 with diverticulitis. The children’s lawsuit alleged Murray-Kaplan wouldn’t enter the guest house because it smelled like feces and urine.
His health quickly deteriorated after a surgery. He also reported that he “had trouble thinking” since he began taking appetite-stimulant drugs in 2010, according to testimony.
Bauman, Murray-Kaplan’s lawyer, said his client was forced to listen to comments about plastic surgery, claims that she was destitute before marrying Kaplan and insinuations of infidelity — even though no evidence of any affair was presented.
“That’s because she didn’t,” Bauman said.
Murray-Kaplan’s team presented evidence from Dr. Richard Bligh, a St. Louis County physician specializing in age management who treated both Kaplan and Murray-Kaplan.
Bligh testified that Kaplan had no “cognitive difficulties of any type,” although other doctors and medical reports indicated problems.
One intriguing subplot was not specifically mentioned at trial. Affidavits from the children that were not presented to the jury zeroed in on Murray-Kaplan’s “well publicized socialite lifestyle, virtually always in his absence,” which they said demoralized Kaplan. In particular, she “flaunted” her relationship with Koster, Missouri’s attorney general, in front of Kaplan, one affidavit claims.
“Perhaps most oppressing, Murray-Kaplan grandstanded her relationship with Koster by having him squire her to social galas at which they were photographed and made coy statements to the press,” said Michael Kaplan in an affidavit.
Koster reported two donations, $7,075 and $26,238.54, from Christine Murray-Kaplan in 2012. Ed Martin, Koster’s Republican opponent for attorney general that year, lodged an ethics complaint questioning the nature of the donation because it was listed as “in kind,” usually meaning goods or services instead of cash.
“To add insult to injury, Murray-Kaplan diverted Kaplan Real Estate office staff to working on Koster campaign activities,” says an affidavit from David Wright, the son-in-law who worked for Kaplan and was later fired.
Koster’s campaign spokeswoman didn’t return messages for comment on Monday.
Catherine Hanaway, a Republican candidate for Missouri governor who could face Koster, a Democratic candidate in the race, filed the original court petition on behalf of the children.
Hanaway said after Monday’s court victory that she decided against presenting such evidence to the jury because it may not have been relevant.
“We put the very best evidence we had and the most persuasive evidence before the jury,” Hanaway said. “I evaluated it like any other case. This was a case about whether Christine Murray-Kaplan used undue influence.”
Nicholas J.C. Pistor • 314-436-2239 @nickpistor on Twitter npistor@post-dispatch.com
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Children win family dispute over Ladue man's $50 million fortune
2015-03-23T23:25:00Z2015-03-29T14:04:03ZChildren win family dispute over Ladue man's $50 million fortuneBy Nicholas J.C. Pistor St. Louis Post-Dispatch stltoday.com
CLAYTON • A bitter family dispute over a real estate magnate’s millions culminated on Monday when a jury decided the man’s socialite widow used undue influence to gain control of his company.
The high-stakes drama has featured sensational allegations, a dash of Missouri political intrigue and a glimpse into the life of a wealthy Ladue family. It pitted the adult children of the late Robert Kaplan against their stepmother, Christine Murray-Kaplan, his widow.
The case featured St. Louis lawyer Catherine Hanaway, a former U.S. attorney and current GOP candidate for governor who is representing the children, against Robert Blitz, the man co-leading an effort to build a new NFL stadium in St. Louis, who represents Murray-Kaplan.
And in another twist, the defendant was a donor to and friend of the leading Democratic candidate for governor, Chris Koster.
The children — Michael Kaplan, Julie Salomon and Elizabeth Wright — painted Murray-Kaplan as a manipulative woman who schemed to turn her husband against his family and steer his extensive $50 million wealth into her control. Murray-Kaplan has denied their allegations, saying the children weren’t attentive to their father in the last years of his life — and that he himself made the final decisions about his assets.
Jurors were quick to side with plaintiff Michael Kaplan, Robert Kaplan’s son and the original primary trustee. After two hours of deliberation, jurors decided Murray-Kaplan used “undue influence” to cause her husband to effectively transfer ownership interest in his company, Kaplan Real Estate, to her control a few months before he died in 2013.
The approximate value of the company’s stock wasn’t known. The jury’s decision places the stock back into the trust. Judge Carolyn C. Whittington will decide later on a petition to invalidate amendments to Kaplan’s estate.
Russell Piccoli, a lawyer representing Kaplan’s children, argued Monday that Murray-Kaplan isolated her husband and used his failing health to force him to make changes to his massive trust while relegating him to their mansion’s guest house.
Originally, 90 percent of Robert Kaplan’s assets were set to go to his children. By the time he died, the trust had been amended to give his wife the 90 percent, and his children 10 percent. Piccoli said Murray-Kaplan desperately wanted to keep her lifestyle, which included private jets, a million-dollar wine collection and expensive clothes befitting a socialite.
Several jurors hugged Kaplan’s children after the verdict Monday. The children wouldn’t comment to a reporter, and neither did Murray-Kaplan as she quickly left the courtroom following the jury’s decision.
The couple married in 2001, after 15 months of negotiations over a prenuptial agreement, according to testimony. It was his second marriage and her third.
After the marriage, Piccoli said the children, one whose husband worked for Kaplan’s real estate company, went on Murray-Kaplan’s “hit list.”
He said she banished their pictures from their mansion and turned Kaplan against them.
Murray-Kaplan denied all of the claims.
St. Louis lawyer Steve Stone, who had represented Robert Kaplan for decades, testified that Kaplan eventually made amendments to his trust at Murray-Kaplan’s urging, giving her more wealth upon his death.
A lawyer for Murray-Kaplan said that was done because she was taking care of him while he was sick.
“She stayed with a difficult man for 12 years because love will allow you to endure the quirks of another human being,” said Christopher Bauman, a Murray-Kaplan lawyer, referencing testimony from several witnesses who depicted Kaplan as a gruff, quick-tempered man.
But Stone said Murray-Kaplan threatened her husband with divorce if he didn’t make the changes. Stone made notes to his file of her alleged “relentless yelling and screaming” over the amendments.
Stone, who had worked for Kaplan since the early 1980s, was eventually fired by Kaplan and replaced with new lawyers because Stone wanted to give more of the estate to the children, according to testimony.
The children alleged Murray-Kaplan forced her husband to live in the guest house of his sprawling Ladue mansion after he became ill in 2010 with diverticulitis. The children’s lawsuit alleged Murray-Kaplan wouldn’t enter the guest house because it smelled like feces and urine.
His health quickly deteriorated after a surgery. He also reported that he “had trouble thinking” since he began taking appetite-stimulant drugs in 2010, according to testimony.
Bauman, Murray-Kaplan’s lawyer, said his client was forced to listen to comments about plastic surgery, claims that she was destitute before marrying Kaplan and insinuations of infidelity — even though no evidence of any affair was presented.
“That’s because she didn’t,” Bauman said.
Murray-Kaplan’s team presented evidence from Dr. Richard Bligh, a St. Louis County physician specializing in age management who treated both Kaplan and Murray-Kaplan.
Bligh testified that Kaplan had no “cognitive difficulties of any type,” although other doctors and medical reports indicated problems.
One intriguing subplot was not specifically mentioned at trial. Affidavits from the children that were not presented to the jury zeroed in on Murray-Kaplan’s “well publicized socialite lifestyle, virtually always in his absence,” which they said demoralized Kaplan. In particular, she “flaunted” her relationship with Koster, Missouri’s attorney general, in front of Kaplan, one affidavit claims.
“Perhaps most oppressing, Murray-Kaplan grandstanded her relationship with Koster by having him squire her to social galas at which they were photographed and made coy statements to the press,” said Michael Kaplan in an affidavit.
Koster reported two donations, $7,075 and $26,238.54, from Christine Murray-Kaplan in 2012. Ed Martin, Koster’s Republican opponent for attorney general that year, lodged an ethics complaint questioning the nature of the donation because it was listed as “in kind,” usually meaning goods or services instead of cash.
“To add insult to injury, Murray-Kaplan diverted Kaplan Real Estate office staff to working on Koster campaign activities,” says an affidavit from David Wright, the son-in-law who worked for Kaplan and was later fired.
Koster’s campaign spokeswoman didn’t return messages for comment on Monday.
Catherine Hanaway, a Republican candidate for Missouri governor who could face Koster, a Democratic candidate in the race, filed the original court petition on behalf of the children.
Hanaway said after Monday’s court victory that she decided against presenting such evidence to the jury because it may not have been relevant.
“We put the very best evidence we had and the most persuasive evidence before the jury,” Hanaway said. “I evaluated it like any other case. This was a case about whether Christine Murray-Kaplan used undue influence.”
Nicholas J.C. Pistor • 314-436-2239 @nickpistor on Twitter npistor@post-dispatch.com
Copyright 2015 stltoday.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Editor's note: Your ProbateShark would agree...wholeheartedly... Lucius Verenus, Schoolmaster, ProbateSharks.com Scientific Study Concludes No One Trusts Lawyers By Staci Zaretsky
Many people enter the legal profession with the expectation that the public will see them as members of a noble trade to be revered and admired. Unfortunately, that’s simply not the case at all. For every would-be Atticus Finch, there exists an off-color lawyer joke. If you’d call 5,000 dead lawyers at the bottom of the ocean “a good start,” then you’re not alone.
According to a new study, although lawyers are viewed by the public as part of an “envied” profession, no one really likes them. Sure, lawyers may gain a scant amount of respect from some, but when you’re viewed generally as heartless bastards, no one will trust you…
These are just some of the conclusions drawn from a Princeton University study conducted by Susan Fiske and Cydney Dupree. You may want to have a stiff drink before taking a look at Fiske and Dupree’s warmth v. competence chart to see how lawyers are rated compared to other professions:
While lawyers are perceived as some of the most capable and competent professionals — behind only doctors, scientists, and engineers — they’re almost on par with prostitutes when it comes to warmth. Let that one sink in as you read what Fiske and Dupree have to say about similarly situated professionals:
The [rightmost] corner lists the ambivalently perceived high-competence, low-warmth, “envied” professions: lawyers, chief executive officers, engineers, accountants, scientists, and researchers. They earn respect but not trust. Being seen as competent but cold might not seem problematic until one recalls that communicator credibility requires not just status and expertise (competence) but also trustworthiness (warmth). People report envy and jealousy toward groups in this space. These are mixed emotions that include both admiration and resentment.
Lawyers, of course, can’t blame all of their perceived untrustworthiness on jealousy and resentment. Perhaps if they’d like to stop being seen as “cold, ruthlessly efficient machines,” they should try to pay the same amount of attention to their social interactions with clients as they do their billable hours.
What’s the lesson to be learned here? The next time someone asks you what the difference between a lawyer and a hooker is, it’s not just that the hooker will stop trying to screw you when you’re dead. Gaining trust as well as respect in communicating to motivated audiences about science topics [Proceedings of the National Academy of Sciences of the United States] This Chart Will Show How Respected Your Profession Is [Science of Us / New York Magazine]
Breach of Trust Lawsuit in Florida Still Going Strong
Written by Jeffrey Skatoff • July 25th, 2014
• Probate Litigation, Trust Litigation, Resources, Other Resources,
Siegel v. JP Morgan Chase Bank
What is believed to be the longest and nastiest breach of trust lawsuit in State of Florida history is still going strong, after over a decade, many appeals, and several weeks of trial. The latest trial of the case was completed earlier this year and is once again going to appeal. The probate court, after a two week trial, handed JP Morgan a complete and total victory over the beneficiaries of the estate and trust. Facts
Dorothy Rautbord died in 2002, survived by three adult children. She lived an opulent Palm Beach lifestyle, collecting art, frequenting Palm Beach charity galas, and making significant charitable gifts. She also had a history of making significant gifts to her various family members, staff, and friends.
In 1990, Ms. Rautbord executed a Revocable Trust, which was amended a number of times. At all times relevant, JP Morgan Chase ("JPMorgan"), or its predecessors, was the corporate trustee.
During Ms. Rautbord's lifetime, the 1990 Trust provided that the Trustee shall distribute income and principal for Ms. Rautbord's support, maintenance, health, comfort and general welfare, as determined by the Trustee "in its sole discretion."
Upon her death, the 1990 Trust was to be distributed to her three children, Simon, Judy, and Dan.
In 1991, Ms. Rautbord made Judy her attorney in fact pursuant to a power of attorney. The power of attorney was very broad. The 1990 Trust, however, contained a limitation which stated that all "powers of amendment, modification, and revocation shall be personal to [Ms. Ratbord] and shall not vest in or be exercisable by any person or corporation acting in any fiduciary or like relationship ***"
Dan and Simon challenged a number of actions undertaken by JPMorgan and/or Judith regarding distributions, disbursements and gifts made from the Trust, including support and maintenance for Ms. Rautbord, creating new trusts from the corpus of the existing 1990 Trust, and making significant gifts to third parties during Ms. Rautbord's lifetime. Some of the withdrawals were made with a series of revocation letters executed by Judith, pursuant to which amounts were withdrawn from the 1990 Trust. 2006 Appellate Opinion - Standing
JPMorgan issued an accounting to Dan and Simon. JPMorgan filed a trust complaint seeking to ratify the accounting and specifically to ratify the principal distributions made under the alleged authority of the revocation letters executed by Judith.
The trial court granted summary judgment to JPMorgan Chase on the grounds that Dan and Simon had no standing to challenge the withdrawals from the 1990 Trust, because the trust was revocable at that time. The trial court reasoned that the brothers had "no present interest in the trust during the time that the decedent was alive."
In Siegel v. Novak, 920 So.2d 89 (4th DCA 2006), the appellate court reversed, holding that the brothers did have adequate standing. The first issue was whether New York or Florida law applied. The Court held that the concept of "standing" was one of substantive law, as opposed to procedural law. As such, the standard for determining choice of law is decided under the "significant relationship" test. Under the significant relationship test, the Court held that New York law applied because the trust from 1995 to 2002 was a New York trust governed by New York law.
The Court noted some New York law under which beneficiaries of revocable trusts do not have standing to challenge actions made by the settlor/trustee during the settlor/trustee's lifetime. The Court distinguished this precedent as follows:
A different situation arose in this case, where the settlor was not the trustee. When a person or entity different from the settlor removes property or money from a revocable trust, those withdrawals could conceivably be made without the settlor’s knowledge or consent. In this situation, we hold that, under New York law, after the death of the settlor, the beneficiaries of a revocable trust have standing to challenge pre-death withdrawals from the trust which are outside of the purposes authorized by the trust and which were not approved or ratified by the settlor personally or through a method contemplated through the trust instrument. By outside the purposes of the trust we mean any expenditures that were not “appropriate or advisable for the support, maintenance, health, comfort or general welfare of” Mrs. Rautbord.
The Court further explained:
Without this remedy, wrongdoing concealed from a settlor during her lifetime would be rewarded. One “should not be permitted to escape the duty to account for property which . . . [a] decedent put into [one’s] possession and over which [one] exercised control both before and after the decedent’s death.” La Vaud v. Reilly, 67 N.E.2d 242, 244 (N.Y. 1946).
2007 Appellate Opinion on Attorney Fees
During the pendency of the litigation, JPMorgan paid for its attorneys out of assets of the 1990 Trust, even though its actions had been called into question by the brothers. The trial court, at the request of the brothers, ordered that the fees be returned to the Trust. This decision was affirmed in JP Morgan Trust Company v. Siegel, 965 So.2d 1193 (4th DCA 2007). Even though no pleading alleging breach of trust had been filed, the Court held that JPMorgan should have known it was in a conflict of interest position.
In Shriner and Brigham, the filing of a pleading against a trustee in his individual capacity created a conflict of interest that required the trustee to seek court approval before paying its attorney's fees from trust assets. These cases provide scant guidance on the question of what else could suffice to create such a conflict. J.P. Morgan argues that under the trial court's ruling all trustees are placed in a position of uncertainty as to when to seek court approval before paying attorneys' fees from trust assets. However, we hold that in this case J.P. Morgan should have known from the Siegels' answers to interrogatories in the 2003 action that it would face an action based on the alleged breaches of fiduciary duty and trust mismanagement. At the very least, J.P. Morgan should have realized it was in a position of conflict at that point. Based on the foregoing, we affirm.
Florida law has since been clarified to require that a pleading alleging breach of trust be pending before a trustee is required to seek the payment of fees. 2011 Appellate Opinion on Legal Conclusions of Trial Court
The parties proceeded to trial on the issues in the case. Before the taking of any evidence, however, the trial court made a number of "legal" decisions, which essentially operated as a judgment in favor of JPMorgan. The appellate court, in Siegel v. JP Morgan Chase Bank, 71 So.3d 935 (4th DCA 2011), essentially reversed these rulings, as follows.
The trial court held that the brothers essentially lacked standing to make the challenges. The appellate court reversed on this point:
In any event, the trial court and parties did not interpret Siegel I correctly. Our opinion in Siegel I determined that the Siegels did have standing to challenge the trustee’s actions, because they had a direct interest in the corpus of the trust after their mother’s death. The issue of whether the withdrawals and expenses were appropriate and authorized was not a preliminary standing question but the entire substance of the proceeding, i.e., whether the trustee and attorney-in-fact breached their fiduciary duties. The trial court incorrectly treated the question of whether the withdrawals were appropriate and authorized as a question of standing. We do not conclude that the Siegels consented to this interpretation or waived their right to challenge specific expenses as unauthorized.
The appellate court then addressed the issue of the extensive gifting from the Trust, and essentially held that the gifts should be viewed as a breach of trust.
The trial court found that the trustee had the power to pay gifts from the trust, because the power of attorney contained a specific power of the attorney-in-fact to make gifts. Because the gifts were within that broad power, the trustee acted appropriately in making expenditures for such gifts as requested or directed by Novak. The gifts were part of a long history of generosity on behalf of the settlor, and they were “appropriate or advisable for the support, maintenance, health, comfort, or general welfare of Ms. Rautbord.” The court was incorrect in its interpretation of the trust instrument.
The trust agreement gives no power to the trustee to make gifts. The trustee does have the power to invade the principal for the welfare of the settlor. Specifically, the trustee had the power to disburse income and principal “for the support, maintenance, health, comfort, or general welfare of the Settlor.” The power of attorney, on the other hand, gives the attorney the power to gift as follows:
To make any gift, either outright or in trust, to any individual (including my Attorney-in-Fact) or any charitable organization,provided that any such gift either (i) shall be reasonably consistent with any pattern of my giving or with my estate plan or (ii) shall not exceed the annual exclusion available from time to time for federal gift tax purposes.(Emphasis added).
Significantly, the power of attorney also prohibited the attorney-in-fact from invading the principal of the trust by stating that the attorney in fact was not granted the power “[t]o amend, modify or revoke, in whole or in part, or withdraw any of the principal of, any trust over which I have reserved or have been granted such power .…”. The trust agreement specifically provided that the power of amendment, modification, and revocation were personal to the settlor and could not be exercised by her attorney-in-fact. Thus, the power of attorney specifically prohibited the attorney-in-fact from exercising the power Mrs. Rautbord reserved to herself to revoke the trust. The Siegels claim that the attorney-in-fact attempted to do just that by signing letters of partial revocation to the Trustee to withdraw principal. The trial court’s ruling on standing prevented this issue from being litigated.
Despite the lack of power of the trustee to make gifts, the trustee made gifts and permitted Novak to withdraw principal to pay other gifts. The trustee had no authority to make gifts itself. We can find no legal support which holds that gifts to others can constitute payments for the “comfort or general welfare” of the beneficiary of a trust. Nevertheless, such a finding must be based upon a factual record, which the trial court did not have in concluding otherwise.
The appellate court then instructed that the issue of excessive spending from the Trust on Ms. Rautbord needed to be addressed by determining whether such spending was an abuse of discretion.
The trust instrument gives the trustee authority to “pay to or apply for the benefit of the Settlor, at any time or from time to time, so much or all of the net income and principal thereof as the trustee, in its sole discretion, shall deem appropriate or advisable for the support, maintenance, health, comfort or general welfare of the Settlor.” Under New York law, even though the trustee has the sole discretion to determine the appropriateness of expenditures, it does not foreclose all inquiry by a court of the proper use of such discretion. See In re Lyons’ Estate, 13 Misc.2d 287, 176 N.Y.S.2d 769 (N.Y. Sur. 1958). “[T]he court has the responsibility to ensure that the trustees do not abuse their discretion. Accordingly, the court has the authority to correct abuses in the exercise of absolute discretion that are arbitrary or the result of bad faith.” In re Goodman, 7 Misc.3d 893, 901, 790 N.Y.S.2d 837 (N.Y. Sur. 2005). Where distributions fall within a class of expenditures authorized by the trust, a trustee must still act reasonably and with good faith in carrying out the terms of the trust.
2012 Appellate Opinion on Legal Fees
After JPMorgan prevailed in the last round of proceedings, but prior to the reversal of its victory, JPMorgan sought attorney fees. While the case was on appeal, the trial court awarded several million dollars of attorney fees to JPMorgan. In Siegel v. JP Morgan Chase Bank, 100 So.3d 783 (4th DCA 2012), the appellate court reversed the trial court's award of attorney fees. "Where a court awards prevailing party attorney's fees and the underlying judgment is vacated, the attorney's fee judgment must also be vacated." The Trial (Finally)
After a decade of litigation, the trial on the matter was finally held. The trial court essentially exonerated JP Morgan in full, in JP Morgan Chase Bank v. Siegel (Palm Beach County Circuit Court, Case No. 502003SP001282, Feb 10, 2014). The Disputed Gifts
The trial court held that the gifts were not improper, under several distinct theories. First, the trial court observed that it could not determine based on the evidence presented whether any particular gift was funded with principal, as opposed to income. The court did find, however, that the income of the Trust exceeded the gifting that was made during the relevant time period.
The court also held that the gifting was in Ms. Rautbord's best interest, based on her history of generous gift giving throughout her life.
In the most important part of the trial court's decision, the court attempted to harmonize the prior appellate court decisions with the evidence presented:
The Siegels contend that Siegel II effectively foreclosed the possibility that expenditures made for the purpose of gifting could properly fall wihtin the purposes authorized by the Revocable Trust. However, Siegel II held only that the language of the Revocable Trust, in and of itself, does not provide sufficient authority to gifting by the Trustee. The appellate court held that a factual determination must be made to conclude whether the challenged gifts were, in fact, made for Ms. Rautbord's comfort or general welfare. The Court finds that gifts were made by Judy and authorized by JPMorgan for the comfort and general welfare of Mrs. Rautbord for the reasons stated above.
The Lavish Lifestyle
Challenges to many expenditures and decisions were made, all of which were rejected by the trial court. Two in particular stand out. The first was the decision to move Ms. Rautbord from her large apartment into a smaller apartment with caregivers, instead of into assisted living, which would have been less expensive.
It is clear to the Court that Judy's actions and decisions to move Mrs. Rautbord into the Brazilian Court were made with the purest of intentions. Judy strived to give her mother a safe living environment with trusted caregivers devoted to Mrs. Rautbord and her needs, while maintaining to the greatest extent possible Mrs. Rautbord's dignity and accustomed lifestyle. Based on the evidence presented, Judy's actions were made in good faith.
The second expenditure was for an apparently lavish 90th birthday party for Ms. Rautbord.
The evidence at trial demonstrated that Mrs. Rautbord enjoyed celebrating her birthday, and often threw lavish birthday parties for herself. At least one witness made mention of the party that Mrs. Rautbord threw for her 85th birthday party, and the elegant "red dress" she wore at that party. Mrs. Rautbord's 90th birthday party did not appear to be as lavish as prior parties (for example, it was held at her Palm Beach Towers condominium unit rather than at the Palm Beach country Club). * * * Specifically, the greater weight of the evidence supported the notion that the birthday party expenditure was a milestone life event to be celebrated and one in which Mrs. Rautbord greeted guests and appeared to enjoy herself.
There were many other questioned expenditures which consumed trial for weeks. All of the challenges were rejected by the trial court.
The case is presently being appealed.
Jeffrey Skatoff is a probate and trust lawyer in the State of Florida. - See more at: http://www.clarkskatoff.com/news-resources/blog/breach-of-trust-lawsuit-in-florida-still-going-strong/#sthash.cBUTmyXn.dpuf
An Appleton man is accused of stealing more than $360,000 from his disabled son's trust fund to pay for drugs, pornography and vacations.
Todd D. Laseke, 48, admitted to spending thousands on himself and chalked it up to "stupidity," police said. He is charged in Outagamie County Circuit Court with theft in a business setting, possession of marijuana and possession of drug paraphernalia.
Police said Laseke withdrew or transferred $502,672 from the trust fund to his personal bank accounts from March 2008 to November 2011. While $135,000 can be attributed to Laseke's monthly allowance, $367,672 was spent beyond his stipend, officials said.
Laseke appeared in court Tuesday and declined to comment on the allegations. Court officials said his son is no longer under his guardianship. Medical lawsuit provided $1.3 million for son
In 2008, Laseke was awarded guardianship of his son, 11 years after the family filed a medical malpractice lawsuit against the Bay Area Medical Center in Marinette, federal court records show. In 1999, the child received $1.37 million from the hospital and one of its doctors, and Laseke was awarded $100,000. Laseke's son, now an adult, suffered a brain injury as a child that left him mentally disabled, prosecutors said.
As his son's guardian, Laseke was responsible for maintaining the trust fund and was allotted $3,000 per month for his own living expenses, according to the criminal complaint filed June 12. By law, he was required to submit annual accounting reports to the Outagamie County register in probate's office, which is responsible for oversight.
From 2008 to 2009, Laseke reported spending $154,762 of his son's settlement, court records state.
An court-ordered investigation into Laseke's bank accounts showed he withdrew $189,626 during the two-year period and made several large purchases, including a $29,000 downpayment on a house and a $28,614 minivan, officials said. Police said he also spent more than $9,000 on child support, court fines and loan payments.
Officials began to ask questions when Laseke reported in June 2009 there was $934,223 in the trust. Police: Laseke used son's money for drugs, vacations
Beginning in October 2010, the register in probate asked Laseke to explain the "substantial" spending, as his son had no known medical concerns. In February 2011, Laseke appeared in court and was ordered to submit the report within a month. Officials said he did not comply.
In November 2011, Probate Registrar Sue Lutz received an anonymous letter voicing concerns about how Laseke was spending his son's money, accusing him of wasting it on himself and his other children, court records state.
At that point, officials appointed an attorney as a guardian ad litem to represent Laseke's son and investigate. Through subpoenaed documents, the attorney uncovered Laseke's excessive spending, despite making only $24,669 in other income over the four-year period.
When police spoke with Laseke a month later, he said he used the trust fund money for his home downpayment and the minivan, but thought he had included the purchases in accounting reports, the complaint states. Laseke said he also used the money for trips with his son to Florida to visit his other children multiple times each year, and for a membership fee to an adult website.
Laseke told police he self-medicated with marijuana following a work injury and spent $500 per week for the drug, while also purchasing $400 to $800 of cocaine weekly.
When police searched his home, they found about 12 grams of marijuana, a white powder residue and drug paraphernalia, resulting in the two possession charges, prosecutors said. Oversight strengthened following Schend case
Laseke's timeline of alleged criminal spending coincides with another Outagamie County guardianship case in which an Appleton guardian was accused of stealing about $500,000 from dozens of elderly and disabled clients over a six-year period.
In 2011 and 2012, Jeffrey M. Schend was charged with 15 felony counts of theft and 12 misdemeanor counts of falsifying records. His case came to an end in August 2013, when he died by suicide.
A Post-Crescent Media investigation at the time found that state laws did not provide enough oversight for guardians, which allowed for mismanagement of money and poor documentation. State law did not require detailed audits, and practices varied from county to county.
In Schend's case, his accounting discrepancies weren't discovered until officials received complaints that client bills weren't being paid, according to the newspaper report.
In 2012, the Outagamie courts implemented stronger safeguards to the county's guardianship system in light of the allegations against Schend. Guardians are now required to provide more detailed financial records to the court, and officials randomly select cases to review each year and can fine guardians whose failure to answer questions requires court intervention.
"Previously with the accounts, it was easy to, I would say, not file accurate accounting," Lutz said. "With these measures in place, I believe it makes it more difficult."
Lutz pointed out that Laseke's alleged criminal activity took place prior to the changes, which now require annual bank statements and a ledger sheet itemizing expenses and disbursements. Her office now verifies that the bank statements match ledger sheets.
On Tuesday, Laseke filed paperwork for a court-appointed attorney. Court Commissioner Brian Figy set a $100,000 signature bond for the case, which means Laseke was not taken into custody. He will return to court Thursday.
— Ariel Cheung: 920-993-1000, ext. 430, or acheung@postcrescent.com; on Twitter @arielfab What is a guardian?
Guardianship is a legal process put in place when people can no longer make safe or sound decisions about themselves or their property, according to the National Guardianship Association.
A guardian's responsibilities vary on a case-by-case basis, but often include handling a client's finances and protecting a client's assets. In some cases, a court-appointed guardian determines where a client lives, monitors the client's medical treatment and makes end-of-life decisions.
Guardianships begin with a petition to the court. Judges consider evidence in determining whether a person is incompetent, whether guardianship is appropriate, who will serve as guardian and with what authority.
Mental illness, developmental disability, physical incapacity and advanced age are among various conditions that have been the basis for appointing guardians, the association says. Closer oversight
Among other things, Outagamie County's new rules require court-appointed guardians to:
» Provide a complete, itemized ledger for the entire year for each of their clients when they file their annual accounting documents.
» Obtain bonding valued at the amount of the aggregate assets of their clients, plus an additional $75,000 to cover costs in cases of theft or other misconduct.
» Provide the court with a credit report for themselves and everyone in the guardian's company that handles financial matters.
— Jim Collar, Post-Crescent Media writer
Many people enter the legal profession with the expectation that the public will see them as members of a noble trade to be revered and admired. Unfortunately, that’s simply not the case at all. For every would-be Atticus Finch, there exists an off-color lawyer joke. If you’d call 5,000 dead lawyers at the bottom of the ocean “a good start,” then you’re not alone.
