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Family Law Case Review 2/25/11

Case: Stephanie L. Cotton v. Charles C. Cotton

Case Summary by Mike Kohlhaas, Bingham McHale LLP

HELD: To comply with the Indiana Trial Rules and Due Process, the summons served with a petition for dissolution of marriage must include a clear statement to the Respondent of the risk of default for failure to appear or otherwise respond.

FACTS AND PROCEDURAL HISTORY:

Husband and Wife married in 2002. In March 2009, Husband filed a petition for dissolution of marriage. Wife was served with a summons and copy of the petition, but she did not appear personally or by counsel, nor did she respond to the petition. Husband continued to live in the marital residence for five months after filing, leading Wife to believe that the parties were working on reconciliation and that Husband was not pushing finalization of the dissolution.

However, in September 2009, Husband and his counsel attended a final hearing. Wife had not appeared personally or by counsel, and she received no notice of the final hearing. In Wife’s absence, and following only Husband’s testimony, the trial court defaulted Wife and entered a final dissolution decree that included an award of joint legal and physical custody of the parties’ son, and divided the marital estate. Wife subsequently learned of the Decree, hired counsel, and filed a T.R. 60 motion to set aside the Decree, which was denied. Wife appealed.

On appeal, Wife contended that the Decree was void because it was entered without personal jurisdiction over her, due to insufficiency of process; specifically, the summons used by Husband included language to Wife that she “may personally appear” and that “[y]ou must appear before the Court if directed to do so pursuant to a Notice, Order of the Court, or Subpoena,” but no language articulating a risk of default for doing nothing. In reviewing the summons, the Court of Appeals summarized the applicable law of insufficiency of process, and concluded: “We hold that due process requires that, at a minimum, a respondent in a dissolution proceeding be notified of the risk of default for failure to appear or otherwise respond.”

In this instance, the subject summons presented Wife with the option of appearing or responding to the petition, but did not provide notice to her that the trial court could take further and final action without further notice to her. The Court of Appeals added, “the command of Trial Rule 4(C)(5), grounded in due process, is that the respondent in a dissolution proceeding must be given notice in a ‘clear statement’ of the risk of default for failure to appear or other respond . . . ” Concluding that the subject summons did not comply with Trial Rule 4(C)(5), or the Due Process Clause, the dissolution decree was reversed and remanded for further proceedings.

To view the text of this opinion in its entirety, click here: Stephanie L. Cotton v. Charles C. Cotton

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Law Tips: Estate Planning Does Not Include Just Grandma’s Cameo Brooch Anymore

Digital assets are working their way into everyone’s life…and afterlife…like it or not! Our estate law faculty member, Professor Gerry Beyer, advises that: “Estate planning attorneys need to comprehend fully that this is not a trivial consideration and that it is a developing area of law.” Gerry Beyer, Professor of Law at Texas Tech University School of Law, has timely information for Law Tips readers on the digital assets that are probably already in your clients’ possession:

For hundreds of years, we have viewed personal property as falling into two major categories – tangible (items you can see or hold) and intangible (items that lack physicality). Recently, a new subdivision of personal property has emerged that many label as “digital assets.” There is no real consensus about the property category in which digital assets belong. Some experts say they are intellectual property, some say they are intangible property, and others say they can easily be transformed from one form of personal property to another with the click of a “print” button. See Scott Zucker, Digital Assets: Estate Planning for Online Accounts Becoming Essential (Part II), The Zucker Law Firm PLLC (Dec. 16, 2010). In actuality, some accounts that we consider “assets” are simply licenses to use a website’s service that generally expire upon death. See Steven Maimes, Understand and Manage Digital Property, The Trust Advisor Blog (Nov. 20, 2009).

Digital assets may represent a sizable portion of a client’s estate. A survey conducted by McAfee, Inc. revealed that the average perceived value of digital assets for a person living in the United States is $54,722. McAfee Reveals Average Internet User Has More Than $37.000 in Underprotected ‘Digital Assets’, McAfee.com, (Sept. 27, 2011) (the $37,000 figure is the global average).

While estate planners have perfected techniques used to transfer types of property that have been around for a long time, most estate planners have not figured out how to address the disposition of digital assets. It is important to understand digital assets and to incorporate the disposition of them into clients’ estate plans.

What are digital assets:

The term “digital asset” does not have a well established definition as the pace of technology is faster than the law can adapt. One of the best definitions is found in a proposed Oregon statute:

“Digital assets” means text, images, multimedia information, or personal property stored in a digital format, whether stored on a server, computer, or other electronic device which currently exists or may exist as technology develops, and regardless of the ownership of the physical device upon which the digital asset is stored. Digital assets include, without limitation, any words, characters, codes, or contractual rights necessary to access the digital assets.

Digital Assets Legislative Proposal, OREGON STATE BAR (May 9, 2012).

Digital assets can be classified in numerous different ways, and the types of property and accounts are constantly changing. People may accumulate different categories of digital assets: personal, social media, financial, and business. The individual may also have a license or property ownership interest in the asset. See Laura Hoexter and Alexandra Gerson, Who Inherits My Facebook? Estate Planning or Digital Assets (June 25, 2012). Although there is some overlap, of course, clients may need to make different plans for each.

Personal

The first category includes personal assets stored on a computer or smart phone, or uploaded onto a web site such as Flickr or Shutterfly. These can include treasured photographs or videos, e-mails, or even play lists. Photo albums can be stored on an individual’s hard drive or created through an on-line system. (They also can be created through social media, as discussed below.) People can store medical records and tax documents for themselves or family members. The list of what a client’s computers can hold is, almost literally, infinite. Each of these assets requires different means of access – separate passwords.

Social Media

Social media assets involve interactions with other people on websites, Facebook, MySpace, Linkedln, and Twitter, as well as e-mail accounts. These sites are used not only for messaging and social interaction, but they also can serve as storage for photos, videos, and other electronic files.

Financial Accounts

Though some bank and investment accounts have no connection to brick-and-mortar buildings, most retain some connection to a physical space. They are, however, increasingly designed to be accessed via the Internet with few paper records or monthly statements. For example, an individual can maintain an Amazon.com account, be registered with PayPal, Bitcoin, or other financial sites, have an e-Bay account, and subscribe to magazines and other media providers. Many people make extensive arrangements to pay bills online such as income taxes, mortgages, car loans, credit cards, cell phone and trash disposal.

Business Accounts

An individual engaged in any type of commercial practice is likely to store some information on computers. Businesses collect data such as customer orders and preferences, home and shipping addresses, credit card data, bank account numbers, and even personal information such as birth dates and the names of family members and friends. Physicians store patient information. eBay sellers have an established presence and reputation. Lawyers might store client files or use a Dropbox.com-type service that allows a legal team spread across the United States to access litigation documents through shared folders.

Domain Names or Blogs

A domain name or blog can be valuable, yet access and renewal may only be possible through a password or e-mail.

Loyalty Program Benefits

In today’s highly competitive business environment, there are numerous options for customers to make the most of their travel and spending habits. Airlines have created programs in which frequent flyers accumulate “miles” or “points” they may use towards free or discounted trips. Some credit card companies offer users an opportunity to earn “cash back” on their purchases or accumulate “points” which the cardholder may then use for discounted merchandise, travel, or services. Retail stores often allow shoppers to accumulate benefits including discounts and credit vouchers. Some members of these programs accumulate a staggering amount of points or miles and then die without having “spent” them. For example, there are reports that “members of frequent-flyer programs are holding at least 3.5 trillion in unused miles.” Managing Your Frequent-Flyer Miles (last visited Oct. 21, 20 12). See also Becky Yerak, Online Accounts After Death: Remember Digital Property When Listing Assets, CHICAGO TRIB., Aug. 26, 2012.

The rules of the loyalty program to which the client belongs plays the key role in determining whether the accrued points may be transferred.

Other Digital Assets

Your client may own or control virtually endless other types of digital assets. For example, your client may own valuable “money,” avatars, or virtual property in online games such as World of Warcraft or Second Life.

Yes, complications surround planning for digital assets, but all clients need to understand the ramifications of failing to do so. Cases will arise regarding terms of service agreements, rights of beneficiaries, and the success of online afterlife management companies. Until the courts and legislatures clarify the law, estate planners need to be especially mindful in planning for these frequently overlooked assets.

I thank Professor Beyer for providing this overview of the developing world of digital assets and their importance in estate planning.

_________________________________________________________________________________

About our Law Tips faculty participant:
Prof. Gerry W. Beyer is the Governor Preston E. Smith Regents Professor of Law at Texas Tech University School of Law, Lubbock, TX. He joined the faculty at Texas Tech in June 2005. Previously, Prof. Beyer taught at St. Mary’s University and has served as a visiting professor at several other law schools. He was also the recipient of the 2012-2013 Outstanding Researcher Award from the Texas Tech School of Law. As a state and nationally recognized expert in estate planning, Prof. Beyer is a highly sought after lecturer. He has authored and co-authored numerous books and articles focusing on various aspects of estate planning, including a two volume treatise on Texas wills law, an estate planning casebook, and the Wills, Trusts, and Estates volume of the Examples & Explanationsseries. Professor Beyer received his J.D. from the Ohio State University and his LL.M. and J.S.D. degrees from the University of Illinois.

About our Law Tips blogger:
Nancy Hurley has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We are utilizing her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook and Twitter pages, and other places her legal experience lends itself.

Thank you for reading Law Tips. You may subscribe to this weekly blog through the RSS link at the top of this page.  Also, you are encouraged to comment below or email Nancy. She welcomes your input as she continues to sift through the treasure trove of knowledge of our CLE faculty to share with you.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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Hon. Melissa S May accepts the Excellence in CLE Award from ICLEF President Alan Hux

The Hon. Melissa S. May and Robert C. Beasley Receive the Excellence in CLE Award

At a special dinner prior to ICLEF’s most recent Board of Directors meeting, ICLEF President Alan M. Hux took the occasion to present the Excellence in Continuing Legal Education Award in recognition of two extraordinary people to ICLEF, the Honorable Melissa S. May, Indiana Court of Appeals, and Muncie attorney Robert C. Beasley.

ICLEF's Excellence in CLE Awards presented to the Honorable Melissa S. May and Robert C. Beasley, July 2014

The Excellence in Continuing Legal Education Award is not presented annually, but is presented only when merited. In fact, this award has been presented only once before, to the former Chief Justice to the Supreme Court of Indiana, the Honorable Randall T. Sheperd upon his retirement from the state’s highest bench.

The Honorable Melissa S. May
Our first recipient of the evening was the Honorable Melissa S. May. Judge May has been a long-time friend of ICLEF and has served the organization and the CLE community in many capacities over the years.

In addition to serving as a member of Indiana’s Continuing Legal Education Commission for several years, she has also served on the Board of Directors of ICLEF, has been an ICLEF Committee Chairperson, a program faculty member and a Program Chairperson.Hon. Melissa S May accepts the Excellence in CLE Award from ICLEF President Alan Hux

Currently, she continues to lead ICLEF’s annual Trial Advocacy Skills College; a four-day intensive workshop that seeks to strengthen Indiana’s trial litigators.

Perhaps most notably, however, Judge May serves as program chair of ICLEF’s flagship seminar, the annual Indiana Law Update. The Robert H. Staton Indiana Law Update seminar requires a chair that can lead it into the future, while maintaining the tradition, integrity and quality the seminar and its namesake have long held.

“When we approached Judge May with the invitation to chair Indiana Law Update,” stated President Alan Hux, “she did not hesitate and simply asked How can I help?”

Judge May has provided great leadership and a tireless effort in fulfilling the goals for this most significant CLE seminar.

Robert C. Beasley
While Bob Beasley continues to actively serve on the ICLEF Board of Directors , a role he has served before, Bob continues to do much to help guide ICLEF in the most appropriate and effective direction. Most significantly, Bob was recognized for being one of ICLEF’s most loyal and trustworthy friends over the years.

Beasley Awarded Excellence in CLE Recently, Bob stepped down as the Program Chair of ICLEF’s Year in Review seminar, a position he had held since the inception of the seminar over 20 years ago. Since its humble beginnings, the Year in Review seminar has become one of the most well respected ICLEF seminars and the first to be provided by live, simultaneous broadcasts long before the concept of distance learning became a reality in continuing legal education.

We Owe Much Gratitude
ICLEF is proud to present these two individuals with our highest honor as we offer the gratitude of Indiana’s lawyers for the efforts of innovative leadership and the pursuit of excellence in our state’s continuing legal education.

 

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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Law Tips: The Problem of Financial Exploitation of the Elderly and Disabled

Financial exploitation of the elderly and disabled has been called “the hidden epidemic.” Attorneys who represent the aged and disabled frequently encounter acts of financial exploitation. And attorneys must do what they can to protect their clients from the risk of being financially exploited.

This statement from James Voelz, ICLEF’s Elder Law Institute faculty member, is a reflection of his ongoing concerns about the elderly and disabled clients he serves. I am grateful that Jim agreed to share his expertise on protecting clients in the expanding elder law arena with Law Tips readers. This week he provides background on the “problem” and the applicable law. Then, as we go down this road, we’ll hear Mr. Voelz’s further advice on steps elder law attorneys may want to take to prevent exploitation of clients.

Jim Voelz’s thoughts on the financial exploitation problem:

The Indiana Adult Protective Services (“APS”) program received 41,334 reports, of which 10,506 reports were investigated during 2012. The reports were classified as follows: Abuse- 2,689, Neglect- 3,176, Self Neglect- 3,198, and Financial Exploitation- 1,443. How many cases of financial exploitation are reported? The estimates range from 1 in 5 to 1 in 44.

I recently met with an APS investigator who has almost 25 years of experience. He said that reports of financial exploitation are increasing, and voiced extreme frustration that he has never seen criminal charges filed against a person who financially exploited an elderly or a disabled person! He said that we have the tools to protect people in Indiana, but these tools are not being used effectively. He said the exploiters are getting away with financial exploitation when they are not being prosecuted. He said prosecutors do not file charges, because victims suffer from dementia or other health issues making it difficult to prove that a crime has been committed.

I also contacted Patrick D. Calkins, who is the Program Director for Adult Protective Services. Mr. Calkins told me that APS does not keep statistics about the number of financial exploitation reports that result in criminal charges being filed against the alleged perpetrator. He did verify that the most common excuse for failure to prosecute is “that the victims make bad witnesses.” But he said that his take on this is that homicide victims make bad witnesses also, but prosecutors still file charges for murder.

Mr. Calkins also told me that the victim’s attorney is often the victim’s last line of defense. Consequently, it is important that we do what we can to help our clients not become victims of financial exploitations, and if our client does become a victim, then to help stop the continuation of financial exploitation and to help our client seek appropriate remedies.

Adult Protective Services

Indiana has had an adult protective services (APS) law since 1985. See Indiana Code 12-10-3-1 through 12-10-3-31. Indiana is the only State in which the APS program is a criminal justice function.

The Division of Aging of the Indiana Family and Social Services Administration oversees the APS program. There are 16 APS unit geographic boundaries. APS has 42 field investigators who are employed by “hub prosecutors” who have a contract for services with the Division of Aging, and they are paid from State funds.

A person who believes or who has reason to believe that another person is an “endangered adult” shall make a report to the adult protective services unit, a law enforcement agency, or the Division of Aging on its statewide toll free telephone number (1-800-992-6978), as required by Indiana Code 12-10-3-9.

So what should an attorney, who knows that his client has been financially exploited, do?

Is the attorney required by law to report this? Yes, Indiana Code 35-46-1~3(a) does require a report to be made to the Division of Aging, APS, or a law enforcement agency.

But, what duties does the attorney have pursuant to the Indiana Rules of Professional Conduct?

Rule 1.14(b) and (c) outlines these responsibilities. (Law Tips note: Here is a link to specific language of Rule 1.14: Indiana Rules of Professional Conduct. Consult the Rules for guidance on when a lawyer is permitted or required to take protective measures. One comment to the Rule concludes as follows: “The lawyer’s position in such cases is an unavoidably difficult one.”)

Suspicious Activity Reports

The Financial Crimes Enforcement Network of the United States Department of the Treasury issued an Advisory to financial institutions regarding the filing of suspicious activity reports regarding elder financial exploitations on February 22, 2011. Please refer to http://www.fincen.gov/statutes_regs/guidance/html/fin-2011-a003.html. The Advisory lists potential indicators of elder financial exploitation.

If the financial institution has a reasonable explanation for the transaction based upon the available facts, including the background and possible purpose of the transaction, it is relieved of the obligation to file a Suspicious Activity Report.

Attorneys who are representing clients or other agents who are involved in an activity with a financial institution that could result in the institution filing a Suspicious Activity Report should provide the financial institution with a reasonable explanation for the transaction. This may prevent a visit from Federal or State law enforcement.

Senior Consumer Protection Act

Indiana has a new law called the Senior Consumer Protection Act that became effective July 1, 2013. The Act provides civil remedies involving financial exploitation of a person who is at least 60 years of age. The Act can be found at Indiana Code 24-4.6~6-1 through 24-4.6-6-6.

We’re breaking here in Jim Voelz’s discussion of financial exploitation of the elderly and disabled. But he continues to share his expertise next week in areas such as the right timing for a person to gift their assets and the amount of power given to the attorney-in-fact.

For a comprehensive update in elder law from an outstanding panel, check out the 2014 Elder Law Institute on October 9-10, 2014.

_________________________________________________________________________________

About our Law Tips faculty participant:
James K. Voelz, Voelz Law, LLC, Columbus, Indiana. Mr. Voelz ‘s law practice primarily involves estate and disability planning, estate and trust settlement, elder law, and Medicaid qualification services. Jim is a member of Hoosier Hills Estate Planning Council, National Academy of Elder Law Attorneys and its Indiana Chapter, and the Indiana State Bar Association’s Elder Law and Probate, Trust and Real Property Sections. Mr. Voelz serves on the Committee on Character and Fitness of the Indiana Supreme Court.  And he is also the author of “Senior Moments” newsletter.

About our Law Tips blogger:
Nancy Hurley has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We are utilizing her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook and Twitter pages, and other places her legal experience lends itself.

Thank you for reading Law Tips. You may subscribe to this weekly blog through the RSS link at the top of this page.  Also, you are encouraged to comment below or email Nancy. She welcomes your input as she continues to sift through the treasure trove of knowledge of our CLE faculty to share with you.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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