Philip Klein thought he was getting estate planning advice. At first he probably didn’t realize he was also talking to an insurance agent. His children ended up suing the agent, the insurance company and the "estate planning services" firm employing the agent.

Mr. Klein was 85 years old when he met with Brian Causey, an agent for American Estate Services Inc. (also operating as Advanced Legal Systems, Inc.). Mr. Causey prepared a living trust, a will, a living will and a power of attorney for Mr. Klein. Mr. Causey was not a lawyer; as it turned out, he was an insurance salesman.

Mr. Causey persuaded Mr. Klein that he should liquidate his substantial stock holdings and invest in annuities with American Life and Casualty Company. In all, Mr. Klein ended up liquidating $840,000 in stock to buy the insurance products.

At the beginning of the next year, Mr. Klein received a tax surprise. Because his stock had appreciated in value, he had a $38,000 federal income tax bill to pay. It was at this point that Mr. Klein’s two children even became aware that their father had completely changed his investment holdings.

Mr. Klein died a little more than two years later. While going through his papers, his children learned the full extent of Mr. Causey’s abilities as a salesman. Not only had most of their father’s assets been liquidated to buy annuities, they included substantial penalties for withdrawals and, according to an attorney who reviewed them, were not good estate planning for Mr. Klein at the time.

Mr. Klein’s children sued Mr. Causey, American Estate Services, Addison Insurance Marketing (the insurance firm Mr. Causey worked for), and American Life & Casualty Company. They argued that the defendants had put their own interests—in high commissions and fees—ahead of Mr. Klein’s needs.

At first the Louisiana courts refused to allow Mr. Klein’s children to assert their claims, ruling that they should have acted within one year of first learning about the annuities. The Louisiana Court of Appeal, however, reversed that decision and permitted the case to go forward. Klein v. American Life & Casualty Company, June 27, 2003.

As it turns out some of the defendants in the Klein case are well known across the country. Advanced Legal Systems and Addison Insurance Marketing or related individuals have been the subject of enforcement actions in at least Oregon (in 2001), Indiana (in 1999) and Kansas (in 2001). The Oregon Attorney General has provided a description online of how the companies pressure seniors into buying trusts and annuities. Fellow elder law attorney and friend Tim Takacs (from Tennessee) reported on how an attorney from Kansas got into trouble with the Bar disciplinary board of that state for dealing with Addison Insurance Marketing and a related organization, ALMS.

[After this article appeared in 2003, Addison Insurance Marketing apparently continued to operate--and to get in trouble--in more states. The company and affiliates Gentry Group and American Equity Investment Life Insurance Company were the subjects of a "cease and desist" order from the California Department of Corporations in 2004.]

Note: there is another, unrelated Advanced Legal Systems, Inc., a perfectly legitimate Portland, Oregon, company that provides web services to lawyers.

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