I inherited 2 IRAs from my mother's estate, one for $101,000 the other for $60,000 from two different insurers. I opened a new account with her financial planner. We discussed and agreed to roll the money from both accounts into a stretch IRA to avoid paying taxes on the full amount. The paper work sent to me by one of the insurers was confusing so I asked my FPs office to help me complete it since they are experienced in these matters. They sent the completed forms back to me to sign knowing that I wanted to the money to go into a stretch IRA. When a check for $101k arrived I inquired what to do with it. I was instructed by my planner to deposit it and write a check to their clearing house. Since I cashed the check, I now owe taxes. They have admitted the mistake. Any recourse?
You may have a lawsuit against the financial planner. Consult with a lawyer.
I am a former federal and State prosecutor and have been handling criminal defense and personal injury cases for over 18 years. The above answer, and any follow up comments or emails, is for informational purposes only and not meant as legal advice.
If they took on the responsibility for this you may have a case. There are some lawyers our there who specialize in litigation related to financial planning but they may be hard to find.
This is not legal advice nor intended to create an attorney-client relationship. The information provided here is informational in nature only. This attorney may not be licensed in the jurisdiction which you have a question about so the answer could be only general in nature.
The check should have been made out properly so that it would have simply been ready for deposit in the new account. It may well be that the checks never had to be issued in the first place. You should call a securities attorney to assist you in getting your tax liabilities handled by the firm and/or broker.
The foregoing is not legal advice nor is it in any manner whatsoever meant to create or impute an attorney/client relationship.
Ideally the FP should reimburse you. If the FP is not willing to reimburse you, theoretically you could bring a claim against the FP. Making a claim for $30,000 may be impractical, given the costs to do it. I recommend that you try to negotiate with the FP, and failing that, you seek counsel to negotiate in your behalf. Good luck.
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Yes, you very well could have a claim against the broker who gave you the bad tax advice and his/her brokerage firm - especially if the bad tax advice was given to you by a broker who was employed by a securities brokerage firm that is a member of FINRA (in which case you should look for a securities attorney who specifically has experience handling FINRA cases). In fact, I am currently representing an investor in a similar dispute with her brokerage firm regarding bad/erroneous tax advice.
For starters, the broker and his/her firm are required to comply with FINRA's rules, which require them to - among other things - provide you with suitable advice, explain the consequences of the advice they give you, make you understand the advice they give you. It sounds like your broker's actions failed to comply with these duties. In addition, the facts you describe could potentially constitute negligence, gross negligence, negligent misrepresentation/omission, negligent supervision, breach of contract, breach of duty good faith and fair dealing, and breach of fiduciary duty.
FINRA provides simplified proceedings for investors with disputes involving amounts under $50,000 - which means that the small amount at issue in your case (which I understand to be approximately $30,000) should not preclude you from finding competent representation.
It sounds like you have a viable claim against the financial planner. The success of your claim would also depend on the nature of his admission, whether it was an oral or written admission. You should consult an attorney to discuss this in more detail.
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