Thursday, June 22, 2017
Generally, estate-planning attorneys in California who draft wills and trusts can only be sued by the client who hired them. There is a narrow exception to this rule. An attorney may be liable to a beneficiary when the attorney’s error harms the intended beneficiaries of the will or trust. The court will use a balancing test to determine if the attorney should be accountable for a drafting mistake. Among these factors are the extent of harm, foreseeability, and proximate cause. When all the balancing factors are met, a harmed beneficiary may successfully file suit against the drafting attorney. Of course, potential damages should be sufficient to warrant the suit; litigation may not be worth the effort in every circumstance.
See Keith Davidson, Estate Planning Attorneys May Be Held Liable in Legal Malpractice Lawsuits Where Intended Beneficiaries Lose Inheritance Under a California Trust or Will Due To Attorney Error, Albertson & Davidson, August 4, 2016.
Wednesday, June 21, 2017
Gerry W. Beyer recently published an Article entitled, Recent Texas Cases Impacting the Wills, Probate, and Trust Practice, Wills, Trusts, & Estate Law eJournal (2017). Provided below is an abstract of the Article:
This article discusses recent judicial developments relating to the Texas law of intestacy, wills, estate administration, trusts, and other estate planning matters. The discussion of each case concludes with a moral, i.e., the important lesson to be learned from the case. By recognizing situations that have led to time consuming and costly litigation in the past, estate planners can reduce the likelihood of the same situations arising with their clients.
Special thanks to Robert H. Sitkoff (John L. Gray Professor of Law, Harvard Law School) for bringing this article to my attention.
Wednesday, April 19, 2017
Kaitlyn C. Kelly recently published an Article entitled, Put Privity in the Past: A Modern Approach for Determining when Washington Attorneys Are Liable to Nonclients for Estate Planning Malpractice, 91 Wash. L. Rev. 1851 (2016). Provided below is an abstract of the Article:
Even in the best of circumstances, an estate plan may leave intended beneficiaries frustrated. Occasionally, an attorney's alleged mistake in the execution of a will or administration of a trust sparks the beneficiaries' anger. Under Washington law, it is unclear whether intended beneficiaries may sue an estate planning attorney for malpractice. Generally, an estate planning attorney's client is a testator, not a testator's intended beneficiaries; thus, the intended beneficiaries are not in privity of contract with the attorney. Rather, the only individual in privity with the accused attorney is usually deceased at the time of a malpractice lawsuit. If a strict privity rule applies, courts will leave beneficiaries with few options to hold attorneys accountable for costly mistakes in the drafting or execution of estate planning documents. On the other hand, courts will expand the scope of liability too far if they allow any nonclient to sue an estate planning attorney for malpractice.
First, this Comment traces trends in Washington estate planning malpractice law. The discussion begins with two Washington State Supreme Court decisions that suggest a balancing test, rather than a strict privity rule, defines the scope of attorney malpractice liability to nonclients. Then it analyzes two Washington State court of appeals cases that demonstrate how the balancing test still favors privity in its application. Second, this Comment weighs the strengths and weaknesses of other jurisdictions' approaches to attorney malpractice liability to nonclients. Third, it considers different scenarios in which courts may hold an estate planning attorney liable to nonclients under Washington law. Finally, this Comment recommends that courts require nonclient intended beneficiaries to exhaust Washington's will and trust reformation statute before bringing a claim against an estate planning attorney.
Friday, February 10, 2017
Boston attorney Laurence Barrow (the estate planning equivalent of Clarence Darrow) had recently completed a complicated estate plan for one of his clients. In addition to a maze of international entities and the usual estate planning documents, the plan included a domestic asset protection trust, to be established in Ohio, and which was to hold a substantial portion of the client’s liquid assets. This seemed like a reasonable plan, as the client, Sarah Bellum, was a pediatric brain surgeon and was continually concerned about exposure to malpractice claims.
Pleased with the plan, Sarah made an appointment to sign the documents in Attorney Barrow’s office. On the morning of the day of that appointment, Sarah was scheduled to perform surgery on a five-year-old patient. She performed the surgery, and after checking on the patient proceeded to Barrow’s office. The surgery appeared to be successful, but a short time after the patient was discharged, the child’s parents noticed some strange behavior by the child. A physician who examined the child advised the parents that the behavior could be part of the recovery process and could possibly cure itself in time, but the child should be watched.
At Barrow’s office, Sarah reviewed and then signed all documents. It was agreed that Barrow would follow up with instructions on transferring Sarah’s assets to the Ohio trust. On the way home from Barrow’s office, however, Sarah was involved in an automobile accident, suffering a severe concussion that left her in a coma. The doctors felt she had a good chance of recovery, but they could not say when. In their own words, “It could be four weeks or four months or four years.”
Sarah’s coma turned out to last longer than four weeks or four months. She finally regained her competence after four years. As it also turned out, the child’s condition never improved since the parents obtained the second opinion, and it became clear that the child would have a mild handicap for life. Thus, a malpractice suit was brought against Sarah on behalf of the child for the child’s personal injury. In due time, the child’s suit was successful, and the child was awarded a substantial judgment for damages. In suing on the judgment, the child’s attorney asked the court to treat Sarah’s transfer of assets to the trust as a fraudulent transfer, because the child was a creditor at the time of the transfer, and the suit was brought well within the allowable time period.
Wednesday, August 24, 2016
Naomi Cahn recently published an Article entitled, Incomplete Dispositions, 73 Wash. & Lee L. Rev. Online 259 (2016). Provided below is an abstract of the Article:
In Irresolute Testators, Professor Jane Baron provocatively suggests the existence of two distinct types of testators: the rational, autonomous testator who has made deliberate choices about the contents of her will and whose errors, if any, are minor; and the more vulnerable, less resolute testator who may not have actually made the final decisions enshrined in a formal will. To illustrate how these testators appear in wills law, she analyzes how courts apply the doctrines of harmless error and mistake reformation. While the two doctrines appear to be intended to help the resolute testator, courts instead, she suggests, also apply the doctrines to help the irresolute testator. In causing us to reflect on the distinctions between dispository intent and a formal writing recognizable as a final statement, on rational and boundedly rational testators, on final and almost-final declarations, her article focuses us on the art of line-drawing in wills law. In this commentary, I explore another context that similarly raises issues about testators whose final intent is not clearly expressed: when can a disappointed beneficiary sue the drafting attorney for malpractice? The doctrine of privity confronts the spectre of the irresolute or inconclusive testator, yet courts have developed some dividing lines that differ from those they have developed surrounding harmless error. Privity seems to offer another illustration of how bright-line rules do not necessarily achieve dispository intent, although the privity rules do achieve certainty on only allowing final dispository statements (that are incomplete or show a lack of resolution) to provide a basis for a malpractice action. This commentary applauds Professor Baron’s achievement in focusing us on the limits of the wills reform doctrines and the significance of accounting for different types of testators.
Monday, July 18, 2016
Naomi Cahn recently published an Article entitled, Incomplete Dispositions, 73 Wash. & Lee L. Rev. Online 259 (2016), in response to an Article by Jane B. Baron, Irresolute Testators, Clear and Convincing Wills Law, 73 Wash. & Lee L. Rev. 3 (2016). Provided below is a summary of the Articles:
Jane Baron first discusses how new wills law reforms are allowing judicial correction of harmless errors in will execution, if both the error and testator’s intent are proven by clear and convincing evidence. Moreover, Baron distinguishes between two different types of testators, whom the reforms will affect, in her Article: the rational, resolute testator and the vulnerable, irresolute testator. Further, she illustrates how these types of testators fair under wills law, considering how courts apply the doctrines of harmless error and mistake reformation. Baron suggests that these doctrines help both types of testators. Additionally, Cahn in her commentary discusses the idea of a beneficiary suing the drafting attorney for malpractice. This addition to Baron’s Article focuses on the doctrine of privity and how it confronts the vulnerable testator.
Wednesday, July 13, 2016
In Martin v. Sheehan, a court dismissed an estate planning malpractice case, involving a beneficiary and an attorney. The plaintiff’s mother hired the defendant attorney to help her draft a trust. Her son was named the beneficiary of the trust, and the trust document was later changed to name a third person as trustee. The beneficiary son sued, claiming malpractice and asserting that he should have been named trustee. Upon the court’s ruling, it focused on the necessity of privity between a plaintiff and an attorney, noting that a person cannot sue an attorney unless that attorney represented the person. Additionally, there is one narrow exception to this rule, which allows a person to sue the attorney if that attorney’s services were intended to benefit them. This exception, however, did not apply in this case.
See Jeffrey Skatoff, Federal Estate Planning Malpractice Case Dismissed for Lack of Privity, Florida Probate Lawyers, July 11, 2016.
Thursday, December 24, 2015
A large number of Americans have individual retirement accounts (IRAs) that estate planners often use to help their clients manage assets. There are many estate planning attorneys, accountants, and financial planners that have to face headaches about the potential for liability over their management of a client’s IRA account. This article provides examples of hypothetical situations where different estate planning professionals encounter issues that cause them to become open to personal liability. The rules and regulations governing traditional IRAs, Roth IRAs, taxes, and all of the other issues dealing with IRAs can be very complex and very few individuals are gurus in this subject material. People that are involved in a profession dealing with IRAs or estate planning in general should use prudence and caution when making decisions.
See Seymour Goldberg, New Liability Concerns for Accountants, Financial Planners and Attorneys Regarding IRA Advice, Accounting Today, December 23, 2015.
Friday, July 31, 2015
In Savannah Georgia the longtime Chatham County Probate Court Chief Clerk Kim Birge has plead guilty to stealing $232,000 in a scheme. The Clerk confessed to raiding certificate of deposits belonging to other people for her own benefit. The government case alleges that the clerk used U.S. Mail and private commercial carriers as a part of the scheme. Kim Birge apologized to the clerk for her role in the scheme that involved stealing more than $750,000 in a three-year period. “I have asked God for forgiveness and I am asking this court for forgiveness as well.”
See Jan Skutch, Chief clerk pleads guilty to stealing $232,000 from Chatham County Probate Court, Savannah Morning News, July 31, 2015.
Thursday, July 30, 2015
An 84 year old Cleveland Attorney who pleaded guilty to stealing $115,000 from a client’s estate has been sentenced to serve one day in jail. Gerald Cooper, who practiced law for 57 years, originally could have faced a 15 to 21 month sentence. The attorney was given a lighter sentence due to his age and health problems. The article indicates that Cooper has colon cancer and is starting to experience signs of dementia. Even though he will only serve a day in jail, this conviction does represent a blemish on Cooper’s record and reputation.
See Eric Heisig, Cleveland attorney who stole $115,000 from client’s estate gets one day in jail, Cleveland, July 29, 2015.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.