Claims made against attorneys who practice in the area of estate, probate and trust have been steadily increasing.

As the Baby Boomer generation ages, we are experiencing the largest generational transfer of wealth than at any other time in our history. While the Boomers are the wealthiest of all previous generations, they often lived with a “can’t take it with you” mentality.

Even with relatively large estates, some beneficiaries are surprised to find unexpected charitable gifts were made to friends, neighbor, and relatives outside the nuclear family. Disappointed beneficiaries blame the drafting attorney by questioning testamentary capacity, testamentary intent, estate tax planning strategy or substantive legal work.

Beneficiaries may claim conflict of interest allegations if it appears that the attorney’s loyalty was divided among more than one family member. Because many states have expanded privity, these beneficiaries are now often permitted to maintain lawsuits, even if they were not direct clients.

EPT risk management tips

As increased claims are made against estate, probate and trust attorneys, consider these EPT risk management suggestions:

Document the file—One allegation beneficiaries sometimes make is that the drafting attorney failed to explain the nature of the estate plan to the client, frustrating the client’s wishes. For example, if certain property was kept out of an estate plan, or if certain parties were required to pay unexpected taxes (such as on gifts to a charity), the file should reflect the client’s understanding of the plan and its consequences. Without a clear and documented file, beneficiaries may contend that a surprising result is malpractice, as they “knew” the true intent of the actual client was contrary to the plan.

Avoid dabbling—Estate, probate and trust is an extremely complicated area of practice. Many attorneys, however, dabble in this particular area for numerous reasons. Statutory changes or case law, however, may lead to unintended consequences incapable of correction once the client is unavailable due to death or disability. Attorneys should avoid dabbling in this very complicated area.

Explain tax issues—Attorneys should discuss, and then document who and who is not responsible for the filing of tax documents and for advising on tax consequences. In particular, attorneys should document in writing who is responsible for the filing of gift tax forms, a common source of confusion. The client should understand and be advised that tax consequences and tax filings are important, but unrelated and outside the scope of the engagement.

How to serve as Trustee or Executor—Attorneys should carefully consider all risks before agreeing to serve as a Trustee or Executor. It is good practice for a Trustee or Executor to have the Court approve every action taken, even if the heirs or beneficiaries are aligned and getting along. If there are any legal disputes or services for which the trust needs counsel, the Trustee or Executor should avoid hiring his or her own law firm as the legal fees will generally be questioned.

Avoid conflict of interest—In the absence of any discrete error, an allegation of conflict of interest may be the only theory left to a beneficiary to advance against the drafting attorney. Always keep the actual client in mind. If there is anyone involved in decision making or review other than the actual client, conflict of interest allegations may follow. Keep children or other interested parties out of the room and off correspondence to the client.

Ensure testamentary intent—Lack of testamentary intent and/or undue influence or duress is another common allegation often asserted by disappointed beneficiaries. Common fact patterns that draw these allegations include:

• Testator is in failing or fragile physical or mental health at a time when he or she makes changes to estate documents
• Testator makes drastic changes in estate documents shortly before death or incapacity or significantly decreases one or all of his or her children’s relative share of the estate
• Testator leaves his estate to a beneficiary who was actively involved in the estate plan, such as being present at the execution of the will or trust, recommending a new will or trust, providing instructions to the drafting attorney, reviewing estate documents, securing witnesses and/or safekeeping the will.

Additional EPT risk management measures

To record or not to record? Whether to tape a client is a case-by-case decision that should be made with careful consideration. Some practitioners advocate recording the client during documents execution. If all goes well and the client appears confident and healthy, then presuming its admissibility, the recording may be persuasive on the issue of testamentary intent and capacity.

Other experts and practitioners caution that sometimes a robust and healthy client will appear surprisingly frail or stumble over words (as we all do at times). The recording may lose some of its impact if medical or lay testimony establish that the client experienced moments of lucidity followed by moments of confusion.

Stair stepping—Some attorneys and experts suggest stair stepping any changes to the size of various distributions over time and in sequential documents. In a will contest, numerous documents must then be invalidated to completely eradicate the client’s wishes. In a legal malpractice matter, it is also harder to establish undue influence when the intent of the client is consistently evident over numerous years.

Educating the client—Inform the client of the real possibility of a will challenge and/or a legal malpractice matter that would possibly invalidate their wishes. Suggest that the client:

• Discuss the estate plan in a transparent manner with all beneficiaries
• Avoid completely disinheriting a member of the nuclear family and include a no-contest provision

While these provisions are no guarantee that a probate challenge or lawsuit will be avoided, it may decrease the odds, especially if the unhappy beneficiary was at least, in part, provided for in the estate plan. The client may also consider a trust fund for a child who may not benefit from a large inheritance. Finally, if the client is committed to disinheriting a child, the decision should be clear and reflected plainly in the estate documents, such as in the sentence, “…for reasons known to me, I make no provision for [my son, John Doe] and/or [John Doe’s] lineal descendants”.

In conclusion, lawyers who practice in the area of estate, probate and trust may be more at risk for legal liability claims than other practitioners. Good EPT risk management may be effective in decreasing the severity or frequency of such claims, but it is always a good idea to take additional measures to protect your firm. With Professional Liability Insurance from Lockton Affinity Lawyer, you are covered against the cost of certain legal fees, judgments or settlements resulting from claims and litigation brought against you for the services you provide.

Deborah Bjes, Client Operations and Risk Management Leader, Small & Mid-sized US lawyers 2018 Copyright Swiss Re Corporate Solutions. This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient.