Panel Approves Limit to Bequests to Attorneys : Legislature: Bill aimed at attorney who received millions from Leisure World clients will go to Senate.
SACRAMENTO — State lawmakers on Tuesday moved closer to passing legislation that would restrict lawyers from making themselves beneficiaries of their clients’ estates, a practice that netted an Orange County lawyer millions of dollars from retirees at Leisure World.
The Senate Judiciary Committee voted 8 to 0 to approve the bill, which goes to the full Senate for a vote in two weeks.
The bill, which was written by Assemblymen Tom Umberg (D-Garden Grove) and Bill Morrow (R-Oceanside), would invalidate, with certain exceptions, any bequests to attorneys who prepared or arranged for wills or trusts that gave them gifts.
The two lawmakers pushed for the legislation after revelations in The Times that Laguna Hills lawyer James D. Gunderson, 68, had made himself a major beneficiary of many of his clients’ estates. In one case, Gunderson arranged for a blind and bedridden 98-year-old Leisure World man to sign a will and a trust that together bequeathed the attorney $3.5 million and made the other beneficiaries liable for an estimated $2 million in inheritance taxes he normally would have incurred.
Gunderson, who has repeatedly denied any wrongdoing, received the inheritances despite a longstanding California Supreme Court ruling that anything more than a “modest†gift to an attorney from a client’s estate raises questions of impropriety.
Gunderson’s law practice, which is located just outside the gates of the retirement community of 22,000 residents, has been the subject of investigations by the Orange County Sheriff’s Department, the State Bar of California and the Orange County Bar Assn.
On Tuesday, Umberg said he was delighted that the state Legislature was close to joining more than 30 other states that forbid lawyers’ writing wills that give them part of an estate.
Umberg said he is confident that Gov. Pete Wilson will sign the bill after it is approved by the full Senate.
“I think the chances are excellent this will be the law in the next 60 days,†Umberg said.
The Senate Judiciary Committee voted to pass the latest version of the Umberg-Morrow bill despite some objections by the probate and trust law section of the State Bar of California, which oversees discipline for the state’s 135,000 lawyers.
Noting that lawyers who violate the proposed law would be subject to discipline, the State Bar suggested in a letter to Umberg that the legislation should specify that only lawyers who know that they are committing violations of the law should be punished.
“Because the bill requires both knowledge of the law and knowledge of relationships, we believe that a ‘knowing’ violation only should be punishable,†State Bar officials said. “It is unfair (and perhaps unconstitutional) to impose sanctions and take away one’s license to practice unless there is actual knowledge of the disqualified person relationship.â€
Umberg, a former assistant U.S. attorney, said he disagreed with the State Bar’s objections.
“My view is if we were allowing barbers to write wills, then that might be OK,†he said. “But we’re talking about lawyers. They should know the law.â€
Thirty-eight states already have adopted similar legislation modeled after an American Bar Assn. guideline that states that a lawyer “shall not prepare an instrument giving the lawyer or a person related to the lawyer . . . any substantial gift from a client, including a testamentary gift.â€
Aside from the proposed legislation, the State Bar is proposing to add to its rules of professional conduct a stipulation forbidding lawyers’ preparing wills or trusts that bequeath them gifts.
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