A New York appellate court suspends two attorneys who suggested a client set up a special needs trust for his elderly sister and named themselves as residual beneficiaries. A third beneficiary was noted IRA expert Ed Slott. In re Bigler (N.Y. Sup. Ct., App. Div., 2nd. Dept., No. 2010-10148, March 26, 2014) and In re Pugliese (N.Y. Sup. Ct., App. Div., 2nd Dept., No. 2010-10150, March 26, 2014).
Bernard Goldman hired Attorney John Bigler's firm to prepare a Medicaid application for his sister, who was in a nursing home. Mr. Goldman then entered a nursing home and contacted the firm to create a will for him. The primary beneficiary of the will was a special needs trust for Mr. Goldman's sister. Mr. Bigler and Louis Pugliese, an associate under Mr. Bigler’s control and supervision, were named as alternative beneficiaries of both the will and the special needs trust, and as co-trustees of the trust. (Accountant Ed Slott, who has been called "America's IRA Expert," also was an alternative beneficiary of the will and the trust.) Mr. Goldman signed the will without consulting independent counsel. The attorneys also retitled Mr. Goldman's investment account, which contained the bulk of his fortune, to go to Mr. Goldman's estate instead of to his sister.
When Mr. Goldman died, Mr. Bigler and Mr. Pugliese immediately hired a law firm to represent them in probating the will and entered into a settlement agreement with Mr. Goldman's children, agreeing that they would consent to the probate of the will. The state bar charged Mr. Bigler and Mr. Pugliese with misconduct.
The New York Supreme Court, Appellate Division, suspends the attorneys for two years. The court rules that the attorneys engaged in a deliberate pattern to promote their interests over the client's interest. According to the court, the attorneys "suggested the establishment of a special needs trust, of which they were residual legatees, under circumstances where they knew or should have known that [Mr. Goldman's sister] likely never would benefit from it." In addition, the attorneys had Mr. Goldman sign his will without independent counsel and paid their attorneys out of the gross estate instead of their legacies.
For the full text of these decisions, go to: https://www.courts.state.ny.us/reporter/3dseries/2014/2014_02043.htm and https://www.courts.state.ny.us/reporter/3dseries/2014/2014_02053.htm
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