OLR Compendium > Public Reprimand of Laura R. Schwefel

Public Reprimand of Laura R. Schwefel

2014-OLR 6

On or about September 11, 2009, Attorney Laura R. Schwefel (Schwefel) was appointed Guardian of the Estate of a woman who had been adjudicated incompetent (the Ward). At or about the time she was appointed Guardian of the Estate, Schwefel was made aware of the contentious relationship between the Ward’s two adult daughters, S.S. and P.B., who were acting as the co-trustees of their mother’s revocable living trust.

In 2002, prior to her incapacitation, the Ward had transferred to her revocable living trust an apartment complex she owned and in which she lived. Between the transfer in 2002 and her incapacitation, the Ward had continued to manage the apartment complex, contract for services related to the complex, and collect rents in her own name, despite the transfer to the trust. At the time Schwefel was appointed Guardian of the Ward’s Estate, therefore, the Ward did not own the apartment complex, but rents were being collected and bills received in the name of the Ward.

As of her incapacitation, the Ward was the sole principal and income beneficiary of the trust, of which the apartment complex was the primary asset. The Ward was relying on the income from the apartment complex for her maintenance and care, including the costs of her residence at a nursing facility.

Schwefel initially believed that the Ward owned the apartment complex, but she learned no later than October 12, 2009 that the apartment complex was owned by the trust. In an October 12, 2009 letter to the Ward’s daughters, on which she copied their respective counsel, Schwefel asserted, “As you know, as the Guardian of the Estate I am faced with a significant dilemma. Your mother’s estate is burdened with all of the bills and maintenance of the apartment complex...yet, your mother’s estate does not own this asset. As you know, the asset is owned by your mother’s trust.”

In an October 18, 2009 letter to the court, however, Schwefel inaccurately asserted that the complex was owned by the Ward (as opposed to other assets Schwefel accurately stated were owned “in the name of the trust”).

Schwefel asserted that despite learning on or about October 12, 2009 that the apartment complex was owned by the trust, between October 12, 2009 and December 9, 2009, she was confused as to the scope of her authority as Guardian with regard to the apartment complex and confused as to the relationship between the trust and the Estate. Schwefel understood that the complex was owned “in the name of” the trust, but Schwefel was confused as to whether the trust (and trustees) was responsible for paying the costs and managing the complex, or whether the Estate (and she as Guardian) was responsible. Schwefel asserted that factors contributing to her confusion included that the Ward was the sole principal and income beneficiary of the trust, the apartment complex was the primary income source for the trust, the Ward required all of the income available for her maintenance and support, and the bills and rental payments related to the complex continued to be received in the name of the Ward.

Schwefel also asserted that she perceived that the contentious relationship between the Ward’s daughters, their inability to act in their mother’s best interest, the condition of the complex, Schwefel’s own contentious relationship with one of the daughters, and the Ward’s precarious financial position necessitated that Schwefel assume management and control over the complex, regardless of whether it was owned by the trust. Between October 12, 2009 and December 9, 2009, Schwefel did not seek direction from the court as to whether she had the authority to act with regard to the complex as Guardian of the Estate or what action could be taken if the co-trustees were unable to act.

Evidencing her confusion regarding the scope of her authority as Guardian of the Estate and her confusion regarding the legal distinction between assets held in trust and those that comprised the Ward’s Estate, between October 12, 2009 and December 9, 2009, Schwefel sometimes accurately asserted in communications with the court, interested parties, tenants, and service providers that the complex was owned by the trust, and sometimes Schwefel inaccurately asserted that the Ward owned the apartment complex. Schwefel inaccurately communicated to tenants, interested parties, and service providers that she was authorized by virtue of her appointment as Guardian of the Estate to collect rent and contract for services related to the apartment complex and to direct the management and maintenance of the complex, when in fact she was not so authorized. Schwefel also inaccurately asserted to service providers that she was the only individual authorized to enter into contracts related to the apartment complex, when the co-trustees were the legally authorized persons to do so.

In October 2009, Schwefel advised tenants of the complex that she had arranged for the basement area of the apartment complex to be “cleaned up” and directed tenants to remove their property from the area. In or about November 2009, Schwefel hired two of her nephews to “clean up” the basement area of the complex and paid them a total of $2,150 from the Ward’s assets for their efforts.

On December 10, 2009, Schwefel filed a petition with the court to remove the Ward’s daughters as the co-trustees of the trust, and to appoint Schwefel as successor trustee. On January 28, 2010, the court denied Schwefel’s petition, and informed Schwefel that because the apartment complex was owned by the Ward’s revocable living trust, it was not an asset of the Estate. The court reduced Schwefel’s bill for serving at Guardian of the Estate by 30% as a “…conservative estimate of the time spent” by Schwefel managing the apartment complex that was not an asset of the Ward’s Estate.

Between January 28, 2010 and April 2010, despite understanding that the complex was owned by the Ward’s revocable living trust and despite being instructed during the January 28, 2010 hearing that she was not supposed to be involved with the maintenance and management of the complex, Schwefel continued to act with regard to the apartment complex. Schwefel asserted that due to the intermingling of responsibilities between the Estate and the Trust in relation to the apartment complex, she continued to have doubts about who should bear the responsibility for handling, maintaining and managing the apartment complex, and that the failure of the Ward’s daughters to act necessitated that Schwefel continue to act with regard to the complex. Further, Schwefel asserted that because the court did not specifically clarify during the January 28, 2010 hearing that the rental income from the apartment complex owned by the trust was also trust property, she continued to believe that the rental income was Estate property, despite the complex being owned by the trust. Schwefel continued to collect rents and communicate with tenants until the court ordered her to cease in April 2010.

Schwefel asserts that she did not intend to violate any Supreme Court Rules by her representation of the Estate. There is no evidence that Schwefel acted in a dishonest or deceitful manner with regard to the safeguarding of funds she received on behalf of the Estate or of the Trust.

By: (i) failing between October 12, 2009 and December 9, 2012 to clarify the ownership of the complex and the scope of her authority to act with regard to the complex as Guardian of the Ward’s estate, so that she could accurately communicate with interested persons and act within the scope of that authority; (ii) failing during or after the January 2010 hearing to clarify with the court whether she was entitled to continue to collect rents from tenants; and (iii) failing after the January 2010 hearing to take the steps necessary to understand that rental income from an asset owned by the trust would also constitute trust property, Schwefel violated SCR 20:1.1, which states, “A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”

After being appointed as Guardian, Schwefel made a visual inspection of the contents of the Ward’s apartment. She did not document or inventory the Ward’s personal property located in the apartment or create a property ledger to document the Ward’s property in the apartment. Despite knowing that there was a contentious relationship between the Ward’s daughters, S.S. and P.B., Schwefel allowed S.S. to clean out the Ward’s apartment and to remove or dispose of some of the Ward’s property without first creating an inventory or ledger of the assets comprising the Ward’s Estate. Schwefel did not supervise S.S.’s removal of items from the apartment, document what property S.S. or others with her were taking or disposing of, or issue receipts for the property removed. Because of Schwefel’s failure to make a thorough inventory or ledger of the Ward’s property prior to allowing S.S. to access and remove items from the Ward’s apartment, it was not possible to document the items removed or their value so as to create a complete and accurate accounting of the contents or value of the Estate. The inventory of assets that Schwefel later filed with the court included only some of the items that had been in the Ward’s apartment at the time Schwefel had been appointed Guardian of the Estate.

By failing to: (i) make a thorough inventory and create an accurate and complete ledger of the Ward’s personal property prior to allowing any third party access to the property; and (ii) document the disposition of all such property, Schwefel violated SCR 20:1.15(j)(8)(a), which states, “A lawyer who, as a fiduciary, receives tangible personal property or securities in bearer form shall maintain a property ledger that identifies the property, date of receipt, owner, and location of the property. The ledger shall also identify the disposition of all such fiduciary property received by the lawyer;” and SCR 20:1.15(j)(8)(c), which states, “Upon disposition of any tangible personal property or securities in bearer form held by the lawyer as a fiduciary, the lawyer shall obtain a signed receipt, with a description of the property and the date of disposition, from the recipient.”

Schwefel has no prior discipline.

In accordance with SCR 22.09(3), Attorney Schwefel is hereby publicly reprimanded.

Dated this 17th day of June, 2014.