California Business and Professions Code 6175.3 – A lawyer, while acting as a fiduciary, may sell financial products to …
A lawyer, while acting as a fiduciary, may sell financial products to a client who is an elder or dependent adult with whom the lawyer has or has had, within the preceding three years, an attorney-client relationship, if the transaction or acquisition and its terms are fair and reasonable to the client, and if the lawyer provides that client with a disclosure that satisfies all of the following conditions:
(a) The disclosure is in writing and is clear and conspicuous. The disclosure shall be a separate document, appropriately entitled, in 12-point print with one inch of space on all borders.
Terms Used In California Business and Professions Code 6175.3
- Client: means a person who has, within the three years preceding the sale of financial products by a lawyer to that person, employed that lawyer for legal services. See California Business and Professions Code 6175
- Dependent: A person dependent for support upon another.
- Fiduciary: A trustee, executor, or administrator.
- Financial products: means long-term care insurance, life insurance, and annuities governed by the Insurance Code, or its successors. See California Business and Professions Code 6175
- Guardian: A person legally empowered and charged with the duty of taking care of and managing the property of another person who because of age, intellect, or health, is incapable of managing his (her) own affairs.
- Lawyer: means a licensee of the State Bar or a person who is admitted and in good standing and eligible to practice before the bar of any United States court or the highest court of the District of Columbia or any state, territory, or insular possession of the United States, or licensed to practice law in, or is admitted in good standing and eligible to practice before the bar of the highest court of, a foreign country or any political subdivision thereof, and includes any agent of the lawyer or law firm or law corporation doing business in the state. See California Business and Professions Code 6175
- Power of attorney: A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Source: OCC
- Sell: means to act as a broker for a commission. See California Business and Professions Code 6175
(b) The disclosure, in a manner that should reasonably have been understood by that client, is signed by the client, or the client’s conservator, guardian, or agent under a valid durable power of attorney.
(c) The disclosure states that the lawyer shall receive a commission and sets forth the amount of the commission and the actual percentage rate of the commission, if any. If the actual amount of the commission cannot be ascertained at the outset of the transaction, the disclosure shall include the actual percentage rate of the commission or the alternate basis upon which the commission will be computed, including an example of how the commission would be calculated.
(d) The disclosure identifies the source of the commission and the relationship between the source of the commission and the person receiving the commission.
(e) The disclosure is presented to the client at or prior to the time the recommendation of the financial product is made.
(f) The disclosure advises the client that he or she may obtain independent advice regarding the purchase of the financial product and will be given a reasonable opportunity to seek that advice.
(g) The disclosure contains a statement that the financial product may be returned to the issuing company within 30 days of receipt by the client for a refund as set forth in § 10127.10 of the Insurance Code.
(h) The disclosure contains a statement that if the purchase of the financial product is for the purposes of Medi-Cal planning, the client has been advised of other appropriate alternatives, including spend-down strategies, and of the possibility of obtaining a fair hearing or obtaining a court order.
(Added by Stats. 1999, Ch. 454, Sec. 1. Effective January 1, 2000.)