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I hate to post such upsetting news, but bad people are part of the world we live in. We can't let them paralyze us and cause us to trust no one, for then they "win" by ruining our lives. But it is a reminder that reasonable prudence is the order of the day. Here's the story.
Indiana attorney Kenneth Service stole at least hundreds of thousands of dollars from the special needs trusts (SNTs) he managed for numerous clients with severe disabilities. I guess I should say "allegedly stole" to be safe but it does not really appear to be in question. I don't know if he will ever be able to repay the funds. But at least there has been some justice. He was disbarred from the practice of law, and the latest news is that he has now been arrested for the theft of those funds. After warrants for his arrest were issued by two different Indiana courts, Mr. Service was taken into custody and held without bond on October 2, 2018.
Mr. Service has been either involved or charged in a related string of cases. He has been accused of felony theft in three separate Indiana jurisdictions after authorities discovered that hundreds of thousands of dollars were stolen from some of his clients’ SNTs. The first criminal case against him was filed in December 2016 in Lawrence County, where he was charged with stealing more than $85,000 from two clients. The police officer investigating those allegations against Mr. Service believed it possible that he had “numerous victims in multiple states.”
That belief bore out with additional charges filed against him in June of this year. The Indiana Lawyer.com wrote that those charges, filed in Delaware County, alleged Level 5 felony theft for stealing $23,622 from a former client under guardianship. More charges were filed in Franklin County on September 18, alleging that Mr. Service committed Level 5 and Level 6 felonies. He is accused of stealing more than $102,500 from one client who was also under guardianship.
The first warrant for his arrest was issued on September 17 in Franklin County. A second arrest warrant was issued two days later in Delaware County when he failed to appear for a pretrial conference. Mr. Service is representing himself against all the charges. According to The Indiana Lawyer.com, he is scheduled for jury trial in Delaware County on October 29 and in Lawrence County on November 27.
Mr. Service also was implicated in the case brought against the ironically named National Foundation for Special Needs Integrity, the pooled SNT he founded. In National Foundation for Special Needs Integrity, Inc. v. Reese, the 7th Circuit Court of Appeals ordered the trust to repay the deceased beneficiary’s family $234,181 that it wrongfully retained, following an admission by Mr. Service that he “intentionally intended to confuse” government officials.
Parents of special needs kids have a particularly difficult decision in naming those who will look out for their child when they (the parents) are incapacitated or dead. Who will do a good job of being not just a trustee, but a special needs trustee? The latter involves all of the requisites of being a good trustee, but also (1) technical and practical understanding of the various public benefits rules, and (2) that something extra, that something that makes the trustee someone who really looks out for the beneficiary and is pro-active about using the trust to give the beneficiary the best life possible; something more than sitting in a glass tower, watching investments, filing taxes, and having the Trustee Committee review requests for expenditures each month.
I will tell you from hard experience that family members, no matter how well intentioned, no matter how competent at money management, frequently do a poor job. We find that it is often better to put them in a supervisory role of one kind or another over a professional trustee.
Professional trustees cost money, yes, but it truly is a lot of work and really well worth it to get the job done right and relieve family members of the headache. If clients ask us about professional trustees, we have an in-depth discussion with them about what goals they are trying to achieve with the selection of trustee. The choices of professional trustees include: large to small institutional trustees such as banks; large to small law firms; large to small accounting firms; and some financial advisors (many are restricted by their firms or professional licensure from serving).
There are pros and cons to each. A large institution has deep pockets to cover mistakes, and is highly unlikely to ever engage in theft. On the other hand, many large institutions are no longer serving as trustee of SNTs, and in our experience the ones that do are just as prone to errors as smaller trustees, and smaller trustees tend to be ones with more of the "something extra" that parents are looking for.
The bottom line: (1) This isn't easy. Parents have to take care in choosing trustees. (2) Design your estate plan thoughtfully with your attorney; it is a lot more than filling in a few blanks on some papers. Should someone be appointed to watch over the trustee? Will that overseer have adequate powers to deal with a trustee who is acting suspiciously? What happens if overseer is no longer able to function as overseer? Remember, these trusts need to last for decades after you are gone!
President Donald Trump signed legislation late last week to reauthorize funding for the Federal Aviation Administration for five years. Contained within that package are an increase in civil penalties for bodily harm to passengers with disabilities or damage to wheelchairs and mobility aids, creation of an advisory committee to recommend consumer protection improvements and the development of an “Airline Passengers with Disabilities Bill of Rights.”
Air travel is already unpleasant enough, but can be especially so for people with disabilities, whether it’s the lack of a wheelchair accessible restroom on board or the sensory overload of going through a crowded security line.
While airports are subject to the Americans with Disabilities Act, air travel is governed by the Air Carrier Access Act. The bill of rights is required to use plain language to list the rights of passengers with disabilities, including receiving timely assistance and seating accommodations if requested. The law requires airline employees and contractors toundergo training on the bill of rights.
The new law requires the TSA to revise its training within six months for screening passengers with disabilities. The agency must address proper screening and any particular sensitivities a traveler with a disability might have, including to touch, pressure and sound. Signs must be posted at security checkpoints advising on how to complain of screening mistreatment based on disability.
The Department of Transportation must promulgate final rules within 18 months for service animals on planes, including a service animal definition.
Finally, the law requires studies of airport accessibility best practices and the feasibility of someday allowing in-cabin wheelchair restraint systems so that people could remain in their wheelchairs in flight rather than having to transfer to an airplane seat.
There are a great many factors that cause all kinds of people, not just fathers, to procrastinate creating an estate plan. None of them are valid. They include:
“If I make a Will, then it’s OK to die. I don’t want to die.”
“I don’t have that much money, so I don’t need an estate plan.”
“Everything I have is either joint tenancy or has a death beneficiary designation, so I don’t need an estate plan.”
Fear: aversion to hiring a lawyer.
Fear: not knowing how to select a good lawyer.
Fear: not understanding what is involved in estate planning, or why a lawyer is even necessary.
Fear: “How am I going to know at the end of the day if the lawyer has done a good job?”
Not understanding the value of a great estate plan.
Not wanting to spend money on a lawyer.
But why do fathers in particular seem to hesitate to create an estate plan that will take care of their spouse and children? The same dads who are obsessive about getting their cars tuned up every three months and checking smoke alarm batteries monthly, will keep putting off the will-signing appointment for months or years at a time. Does working without an “estate planning net,” so to speak, feed into many men’s need to be the invincible hero of the family? Is there a relationship between whether a man’s parents discussed, or didn’t discuss, their estate plan, and a father’s willingness to create his own? If a man’s father died young, will that influence a man to take care of his own estate planning, or make him likelier to avoid thinking about it?
However, if you have the responsibility of fatherhood, you must have an estate plan to take care of your spouse and children. An good estate plan will name guardians for minor or special needs children, protect children from themselves when young by having a trustee oversee their inheritance, and even protect those same assets throughout the child’s life from creditors and divorce. Children are perhaps the biggest reason for dads to have an estate plan.
Failure to have an estate plan frequently means that assets pass to people you did not intend, and in a manner that is unwise or disastrous. It may even mean that the decision about who will rear your minor child or oversee matters for your adult special needs child will be decided by a judge. And it all opens the possibility of a family battles.
An estate planning attorney can advise you in creating a plan that fits your unique circumstances and may include children.