Disappointed Heirs Not Permitted to Make Claim Against Dad’s Lawyers

JANUARY 25, 2016 VOLUME 23 NUMBER 4

Like a lot of Americans, Fred Brown (though that’s not his real name) had a complicated family life. He had been married twice, and had two daughters — Martha and Sally — from his first marriage. He was still married to Barbara, and she had two children from her first marriage (Patty and Richard). Fred needed to do estate planning, and he did — he hired a Colorado law firm to prepare his will.

The will his lawyer wrote for him followed his wishes: it left the condominium he and Barbara lived in to Barbara, and a $10,000 bequest to each of the four children (both his and Barbara’s). Everything left over after that would go into two trusts for Barbara’s benefit; on her death, the trusts would be equally divided among the four children.

Fred died in 2003, and Barbara hired her husband’s lawyers to handle the probate. Fred’s daughters Martha and Sally asked about their inheritances, and the law firm told them that they would each receive their $10,000 and that they would share the money in the trusts on Barbara’s death. The lawyers also told Martha and Sally that they represented Barbara, not the whole family, and that if Martha and Sally had any questions about the probate they should get their own legal advice.

Barbara properly established the trusts called for in Fred’s will; they totaled just under $1 million in value. She also hired the same lawyers to prepare her will, which left her condo to her daughter Patty and the rest of her estate to Patty, Martha and Sally.

When Barbara died in 2009, Martha and Sally were upset that they did not receive an equal share of the condominium once owned by their father. They complained that Patty had ended up with about 70% of Barbara’s assets, while they each received only about 15% (it apparently did not bother them that Richard did not receive anything from his mother’s estate). They acknowledged that they would still share the remainder in the trust established under Fred’s will, but objected that Patty would get about $3.2 million in total inheritances from Fred and Barbara, while they would only receive a little under $1 million each.

Martha and Sally sued the law firm that had prepared Fred’s estate plan, alleging that the lawyers had committed malpractice by not ensuring that Fred’s wishes were carried out. They also complained that the lawyers had failed to disclose all the information about the property ownership they had needed to protect their alleged right to receive a share of Barbara’s inheritance on her death.

After a series of motions, the trial court dismissed Martha and Sally’s lawsuit. The judge ruled that even if they could prove that a mistake had been made, Fred’s lawyer did not owe Martha and Sally any duty giving rise to a claim. The Colorado Court of Appeals affirmed the dismissal, and the state Supreme Court agreed to review the entire matter.

The Colorado Supreme Court upheld the dismissal of Martha and Sally’s claim. Colorado strictly applies the doctrine of “privity” to prevent lawsuits against lawyers by non-clients in most circumstances, and these facts did not persuade the state’s high court to modify its rules. Besides, as the Supreme Court Justices noted, it looks like Fred got exactly what he wanted: his home went to his wife, $10,000 went to each child on his death, and the rest of his estate stayed in trusts that got divided into four equal shares on his widow’s later death. Baker v. Wood, Ris & Hames, Professional Corporation, January 19, 2016.

Would a similar case be dismissed in Arizona, as it was in Colorado? The answer is uncertain. Arizona does not have cases expressly upholding, modifying or rejecting the “privity” doctrine. A growing body of law across the country indicates a general move toward higher liability for attorneys, but it is not clear whether that trend will likely come to Arizona.

Should Fred’s lawyers have been liable to Martha and Sally? Not if they followed Fred’s wishes, regardless of how unhappy his daughters might have been. The difficulty in such a case would be to establish with clarity what Fred wanted. Did he clearly contemplate what might happen between his own death and the death of Barbara six years later — and of course Fred did not know with certainty that he would die first, much less how long Barbara might survive him.

This is one of the challenges we face when counseling clients about estate planning. Married couples may be able to imagine what might happen after the death of the first spouse to die, but neither spouse is likely to have contemplated what their survivor’s life might look like six, or ten, or twenty years after the death of the first spouse. It’s impressive, actually, that Fred and Barbara got as much right as they did — many widows in Barbara’s situation might begin to modify the disposition of their assets more quickly than the six years Barbara left things (more or less) as they were.

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2 Responses

  1. Jerome Borison

     /  January 25, 2016

    Do you believe the executor could have brought the malpractice action against the attorney since the estate was diminished because of the bad advice, i.e., that the attorney did not advise that the joint tenancy be severed so that at least half of the property would have found its way into the father’s estate?

  2. Jerome:

    Interesting question, and different from the one actually posed in the Colorado case. First point to be made: the answer probably would vary by state.

    That said, it seems to me that the estate’s claim is probably better than the disappointed heirs’ claims. The estate could be said to be acting on behalf of the decedent’s own interest. If the estate can not bring an action, then no one can recover for malpractice, and that seems like an unattractive outcome.

    Here’s a mechanical issue, though: who is personal representative of the estate? If it is the surviving spouse, or the spouse’s estate, or the stepchild who benefits from the transfer, then it seems unlikely that they would initiate litigation. Unless, of course, the disappointed heirs threatened to sue for breach of fiduciary duty if they did not initiate the action — and then we’re (more or less) back where this case started.

    Conversely, if one of the disappointed heirs gets appointed as personal representative, and they decide to bring an action, can the surviving spouse (or her estate) claim a breach of fiduciary duty for expending estate resources on something that primarily benefits the personal representative? It is a conundrum.

    Robert B. Fleming
    Fleming & Curti, PLC
    Tucson, Arizona

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