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Legal Woes for Suspended SNT Attorney and the Pooled Trust He Founded Continue
Indiana attorney Kenneth S. Service was suspended from practice in June after he was charged with felony theft of more than $85,000 from two of his clients’ special needs trusts (SNTs). On September 27, he was at the center of a case before the Seventh Circuit Court of Appeals, where the ambiguous trust documents he drafted ultimately benefited the pooled special needs trust he established, The National Foundation for Special Needs Integrity, Inc. Another suit claiming that the National Foundation charged excessive fees was recently settled, but litigation surrounding Mr. Service’s dismissal by the National Foundation continues.
The case on appeal to the Seventh Circuit, National Foundation for Special Needs Integrity v. Reese, was decided by the district court in March 2017. National Foundation, acting as trustee of several pooled SNTs, had retained at least $220,000 left in the account of Theresa Givens’ SNT when she died. Ms. Givens’ children sought reformation of the trust agreement that had named Ms. Givens herself as trust beneficiary, claiming that it did not reflect their mother’s wishes. The U.S. District Court for the Southern District of Indiana denied the claim for reformation based on statements by Mr. Service (who drafted the SNT agreement), the language of the agreement, and laches, allowing National Foundation to keep the funds.
Before the Seventh Circuit, attorneys for Ms. Givens’ estate argued that Mr. Service has admitted to intentionally drafting trust documents that were meant to be confusing. Responding to oral argument by National Foundation’s counsel, Judge David Hamilton noted that there is no record of National Foundation’s decision to retain the funds from Ms. Givens’ trust. He continued, “Why should we simply not decide it’s an ambiguous document that needs to be construed against the drafter and order distribution?”
Mr. Service founded National Foundation in 2007 and it administers pooled trusts in 46 states, according to its website. “Tax records for the organization in the years since [2007] show Special Needs Integrity compensated Service in some years with more than one-quarter of total revenue and spent aggressively on legal fees and management costs,” according to The Indiana Lawyer.com. In June, National Foundation reportedly settled a class-action lawsuit that claimed it had overcharged clients and collected unauthorized fees. Still pending is a suit by National Foundation against Mr. Service, and his countersuit, that was filed after he was fired in 2014. Also pending are the charges of two counts of Level 5 felony theft from clients’ SNTs. On October 24, 2017, the Indiana Supreme Court indefinitely suspended Mr. Service for failing to cooperate with its Disciplinary Committee's investigation.
To read an account of the oral argument before the Seventh Circuit and Mr. Service’s other legal travails from The Indiana Lawyer.com, click here.
To read the Southern District of Indiana’s opinion in National Foundation for Special Needs Integrity v. Reese, (S.D. Ind., No. 1:15-cv-00545-TWP-DKL, March 21, 2017), click here.
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A roundup of elder law news and practice development articles culled from news sources across the nation during the week of November 13, 2024, to November 18, 2024.
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Legal Woes for Suspended SNT Attorney and the Pooled Trust He Founded Continue
Indiana attorney Kenneth S. Service was suspended from practice in June after he was charged with felony theft of more than $85,000 from two of his clients’ special needs trusts (SNTs). On September 27, he was at the center of a case before the Seventh Circuit Court of Appeals, where the ambiguous trust documents he drafted ultimately benefited the pooled special needs trust he established, The National Foundation for Special Needs Integrity, Inc. Another suit claiming that the National Foundation charged excessive fees was recently settled, but litigation surrounding Mr. Service’s dismissal by the National Foundation continues.
The case on appeal to the Seventh Circuit, National Foundation for Special Needs Integrity v. Reese, was decided by the district court in March 2017. National Foundation, acting as trustee of several pooled SNTs, had retained at least $220,000 left in the account of Theresa Givens’ SNT when she died. Ms. Givens’ children sought reformation of the trust agreement that had named Ms. Givens herself as trust beneficiary, claiming that it did not reflect their mother’s wishes. The U.S. District Court for the Southern District of Indiana denied the claim for reformation based on statements by Mr. Service (who drafted the SNT agreement), the language of the agreement, and laches, allowing National Foundation to keep the funds.
Before the Seventh Circuit, attorneys for Ms. Givens’ estate argued that Mr. Service has admitted to intentionally drafting trust documents that were meant to be confusing. Responding to oral argument by National Foundation’s counsel, Judge David Hamilton noted that there is no record of National Foundation’s decision to retain the funds from Ms. Givens’ trust. He continued, “Why should we simply not decide it’s an ambiguous document that needs to be construed against the drafter and order distribution?”
Mr. Service founded National Foundation in 2007 and it administers pooled trusts in 46 states, according to its website. “Tax records for the organization in the years since [2007] show Special Needs Integrity compensated Service in some years with more than one-quarter of total revenue and spent aggressively on legal fees and management costs,” according to The Indiana Lawyer.com. In June, National Foundation reportedly settled a class-action lawsuit that claimed it had overcharged clients and collected unauthorized fees. Still pending is a suit by National Foundation against Mr. Service, and his countersuit, that was filed after he was fired in 2014. Also pending are the charges of two counts of Level 5 felony theft from clients’ SNTs. On October 24, 2017, the Indiana Supreme Court indefinitely suspended Mr. Service for failing to cooperate with its Disciplinary Committee's investigation.
To read an account of the oral argument before the Seventh Circuit and Mr. Service’s other legal travails from The Indiana Lawyer.com, click here.
To read the Southern District of Indiana’s opinion in National Foundation for Special Needs Integrity v. Reese, (S.D. Ind., No. 1:15-cv-00545-TWP-DKL, March 21, 2017), click here.
Legal Woes for Suspended SNT Attorney and the Pooled Trust He Founded Continue
<p>Indiana attorney Kenneth S. Service was <a href="https://attorney.elderlawanswers.com/indiana-attorney-accused-of-stealing-from-snts-is-suspended-16340" target="_blank">suspended from practice in June</a> after he was charged with felony theft of more than $85,000 from two of his clients’ special needs trusts (SNTs). On September 27, he was at the center of a case before the Seventh Circuit Court of Appeals, where the ambiguous trust documents he drafted ultimately benefited the pooled special needs trust he established, <a href="https://www.specialneedsintegrity.org/about.html" target="_blank">The National Foundation for Special Needs Integrity, Inc.</a> Another suit claiming that the National Foundation charged excessive fees was recently settled, but litigation surrounding Mr. Service’s dismissal by the National Foundation continues.</p>
<p>The case on appeal to the Seventh Circuit, <em>National Foundation for Special Needs Integrity v. Reese</em>, was <a href="https://attorney.elderlawanswers.com/court-denies-claim-to-reform-pooled-snt-agreement-in-favor-of-deceased-beneficiarys-children-16020" target="_blank">decided by the district court in March 2017</a>. National Foundation, acting as trustee of several pooled SNTs, had retained at least $220,000 left in the account of Theresa Givens’ SNT when she died. Ms. Givens’ children sought reformation of the trust agreement that had named Ms. Givens herself as trust beneficiary, claiming that it did not reflect their mother’s wishes. The U.S. District Court for the Southern District of Indiana denied the claim for reformation based on statements by Mr. Service (who drafted the SNT agreement), the language of the agreement, and laches, allowing National Foundation to keep the funds.</p>
<p>Before the Seventh Circuit, attorneys for Ms. Givens’ estate argued that Mr. Service has admitted to intentionally drafting trust documents that were meant to be confusing. Responding to oral argument by National Foundation’s counsel, Judge David Hamilton noted that there is no record of National Foundation’s decision to retain the funds from Ms. Givens’ trust. He continued, “Why should we simply not decide it’s an ambiguous document that needs to be construed against the drafter and order distribution?”</p>
<p>Mr. Service founded National Foundation in 2007 and it administers pooled trusts in 46 states, according to its website. “<span style="background-color:white"><span style="color:black">Tax records for the organization in the years since [2007] show Special Needs Integrity compensated Service in some years with more than one-quarter of total revenue and spent aggressively on legal fees and management costs,” <a href="https://www.theindianalawyer.com/articles/44955-suspended-special-needs-trust-attorney-foundations-legal-woes-continue" target="_blank">according to The Indiana Lawyer.com</a>.</span></span> In June, National Foundation reportedly settled <a href="https://attorney.elderlawanswers.com/pooled-special-needs-trust-accused-of-overspending-on-legal-fees-15418" target="_blank">a class-action lawsuit</a> that claimed it had overcharged clients and collected unauthorized fees. Still pending is a suit by National Foundation against Mr. Service, and his countersuit, that was filed after he was fired in 2014. Also pending are the charges of two counts of Level 5 felony theft from clients’ SNTs. On October 24, 2017, the Indiana Supreme Court <a href="https://www.theindianalawyer.com/articles/45206-supreme-court-indefinitely-suspends-special-needs-trust-lawyer?v=preview" target="_blank">indefinitely suspended</a> Mr. Service for failing to cooperate with its Disciplinary Committee's investigation. </p>
<p>To read an account of the oral argument before the Seventh Circuit and Mr. Service’s other legal travails from <em>The Indiana Lawyer.com</em>, <a href="https://www.theindianalawyer.com/articles/44955-suspended-special-needs-trust-attorney-foundations-legal-woes-continue" target="_blank">click here</a>. </p>
<p>To read the Southern District of Indiana’s opinion in <em>National Foundation for Special Needs Integrity v. Reese, </em>(S.D. Ind., No. 1:15-cv-00545-TWP-DKL, March 21, 2017), <a href="https://www.gpo.gov/fdsys/pkg/USCOURTS-insd-1_15-cv-00545/pdf/USCOURTS-insd-1_15-cv-00545-3.pdf" target="_blank">click here</a>. </p>
<p> </p>
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