Hemenway & Barnes AUTHORED LITERATURE

Pursuing Claims For Negligent Estate Planning
Massachusetts Lawyers Weekly
April 1, 2002

By Edward Notis-McConarty

Potential malpractice claims are a fact of life for most professionals. The facts are not the same, however, for lawyers who do estate planning.

Even if a parent seeks a will leaving his or her estate to the children, a lawyer whose negligence prevents the children from inheriting may be protected from liability.

The courts here and elsewhere have emphasized that the estate- planning process is highly personal, private, and requires a high degree of trust between lawyer and client.

For these and other reasons discussed below, procedural and evidentiary protections exist to discourage even close family members from pursuing claims for negligent estate planning.

In Massachusetts, the jury is still out, but indications are that these historic protections may be modified but will continue to restrict claims alleging careless estate planning.

Middle Ground

Common sense tells us that if careless estate planning results in a family member or other beneficiary receiving less than intended, the beneficiary who suffers the financial harm should have a claim for damage.

Until 1961, black letter law barred any such claim against the negligent estate planner because the disappointed beneficiary lacked "privity" with the lawyer.

The door opened a crack with the decision in Lucas v. Hamm, 56 Cal. 2d 583; 364 P2d 685 (1961), which applied a "balancing of factors" theory to determine if someone other than the deceased client could recover damages for a careless drafting mistake.

Recent decisions have slammed the door shut again in some states by strictly enforcing the privity requirement. Noble v. Bruce, 349 Md. 730, 709 A2d 1264 (1998); Estate of Spivey v. Pulley, 526 NYS 2d 145 (N.Y. App. Div. 1988) (no claim against drafter who instructed beneficiary to witness will, thereby voiding gift to that beneficiary); Barcelo v. Elliot, 923 SW 2d 575 (Tex. 1996); see generally K. Rushin, "Estate Planning Malpractice: Will Alabama Courts Relax the Privity Barrier?" 52 Ala. L. Rev. 1335 (2002).

Two recent Massachusetts decisions have re-visited the "privity" barrier to claims against estate planners. In line with the majority of recent decisions, the two Massachusetts decisions took a middle ground. Miller v. Mooney, 431 Mass. 57 (2000); Rogers v. Regnante, 50 Mass. App. Ct. 149 (2000).

In Miller, the Supreme Judicial Court upheld a summary judgment ruling against the decedent's children who brought a claim against their mother's estate planner. The court rejected a tort theory of recovery, but left open the possibility that the children could recover on a third-party beneficiary contract claim for careless will drafting.

The decedent, Estelle Coggins, had executed a 1981 will leaving two small bequests to charity and the balance of her estate (including her valuable house on Nantucket) to her three children.

The next year, while Coggins' longtime lawyer, Robert Mooney, was away on vacation, Coggins executed a new will drafted by Attorney Mooney's associate. No copy of this 1982 will was kept in the file and Attorney Mooney learned of it only after Coggins' death.

The 1982 will left most of Coggins' estate (including the house) to the charities, and the much reduced balance of her estate to the children. There was substantial evidence that, in 1991, Coggins decided to sell the house and leave the bulk of her estate to the children. Coggins' children communicated this desired change to Attorney Mooney, who then met with Coggins' and apparently confirmed that she wanted to benefit the children primarily.

The SJC affirmed the trial court's award of summary judgment to Attorney Mooney on the children's count for legal malpractice. Relying on the traditional privity concept, the court ruled that because the children were not the clients, the lawyer owed them no duty of care and could not be found negligent. The court noted that there was no evidence that Coggins had paid Attorney Mooney to provide services for the children.

The Miller court went on to reject the children's attempt to claim as third-party beneficiaries of the contract between the lawyer and the decedent.

While apparently accepting the possibility of a recovery on such a theory by a non-client, the court's analysis provides slim hope of establishing the elements necessary to prevail on such a claim. The court noted that for a non-party to recover for breach of contract, that non-party must prove "clearly and definitely" that he or she is the intended beneficiary.

Moreover, the court ruled that if the contract for legal services was intended to benefit Coggins, the children could not be "intended beneficiaries" of the contract.

The court also ruled that if the contract required Attorney Mooney to draft a will specifically to benefit the children, the children nevertheless were barred from recovery because no such contract was in writing. See GLM c. 259, §5A (contract to make a will enforceable only if written). Thus, the court upheld dismissal of the children's claims whether the decedent intended to benefit the children or not.

Seven months after Miller, the Appeals Court decided Rogers v. Regnante, 50 Mass. App. Ct. 149 (2000).

In Regnante, the plaintiffs were the children from decedent's first marriage. The decedent had told the children that he would leave his entire estate to them, and after his second marriage signed a new will doing so.

The children claimed that a subsequent will and pour-over trust giving his second wife a general testamentary power of appointment, was a drafting error inconsistent with the decedent's overriding wish to benefit his children.

The court in Regnante analyzed the claim on a tort theory of "legal malpractice". The court assumed (without deciding) that the plaintiffs could overcome their lack of privity with the lawyer by proving the existence of a contract to make a will for their benefit.

However, the court concluded that the children did not offer the "full, clear, and decisive proof" necessary to overcome the Statute of Frauds or the Statute of Wills, citing Ryan v. Ryan, 419 Mass. at 92-93 (1994). The court likened this standard to the "clear and convincing" evidence required to reform a will.

Unanswered Questions

In some respects, Miller and Regnante reflect the reasoning adopted by the majority of other states on recent claims by non- clients for negligence in estate planning.

For example, several courts have held that the preponderance of the evidence standard applicable to other negligence claims does not apply to non-client claims for careless estate planning. See, e.g., Pivnick v. Beck, 165 N.J. 670 (2000) ("clear and convincing evidence"); Restatement of the Law (Third), The Law Governing Lawyers § 51(3)(a) (2000).

Florida prohibits use of extrinsic evidence to prove estate planning malpractice, DeMaris v. Asti, 426 So2d 1153, 1154 (Fla. D. Ct. App. 1983).

Similarly, Miller and Regnante are consistent with the majority trend toward allowing negligent estate planning claims, but drastically restricting the class of potential plaintiffs who can seek damages.

Some states have explicitly held that only beneficiaries whose names actually appear in a will can bring an action for negligent estate planning. See, e.g., DeMaris, supra; Guy v. Liederbach, 459 A2d 744, 746 (Pa. 1983).

However, Miller and Regnante leave many unanswered questions. Miller seems to reject a tort theory of attorney malpractice, although leaving open the possibility of a contract based recovery on a third party beneficiary theory.

Regnante, though, seems to analyze only the tort theory, referring to the decedent's intent only to determine the existence of a "duty" required to recover for negligence.

Neither Miller nor Regnante addresses the question of whether a non-client who has unsuccessfully challenged a will in Probate Court can thereafter bring a malpractice claim in Superior Court.

New Jersey has held that disappointed beneficiaries who fail in an action to reform a will are collaterally estopped from pursuing a claim that the will was drafted negligently, Pivnick, supra.

Since the right to a jury in a negligence claim can be a critical factor in the outcome, a plaintiff may want to file in Superior Court only, avoiding the Probate Court where no jury is available.

Given the substantial restrictions on claims for negligent estate planning by injured beneficiaries, a logical question is, can the decedent's estate itself bring the claim?

Courts from other jurisdictions have answered the question in the negative, holding that the estate itself doesn't suffer financially if the assets go to an unintended beneficiary due to careless drafting of a will. Estate of Spivey, supra at 147; W.M. McGovern, "The Increasing Malpractice Liability of Will Drafters," 133 Trusts and Estates 18 (No. 12 December 1994). Spivey also held that even a decedent's estate lacks privity with the lawyer who drafted the will.

The courts do recognize that if the decedent has not received the competent estate planning services for which a legal fee was paid, the estate may be entitled to a return of the fee. Noble v. Bruce, 349 Md. 730 (1998); McGovern, supra at 18.

Massachusetts, however, dismissed a claim for expenses by an heir who had successfully challenged a will in Probate Court. McGovern, supra at 18; Logotethi v. Gordon, 414 Mass. 308 (1993); See GLM c. 230, §5 (allowing heirs at law to assert estate's claims against third parties under certain circumstances.)

Thus, negligence in estate planning cannot generally be challenged by the estate, and it can be challenged by others in very limited circumstances, subject to an onerous standard of proof. This approach is based on (1) the potential conflicting duties a lawyer would otherwise owe to the client and potential beneficiaries; (2) the danger of admitting extrinsic evidence of the intention of a dead person; and (3) the private, sensitive and changing nature of planning for testamentary dispositions. Miller, at 63-64; Noble v. Bruce, supra.

How these underlying principles will be applied to specific fact patterns in Massachusetts remains to be seen.

A claim by a disappointed child that his or her parent did not (or perhaps could not) understand or desire the result clearly set out in a valid will implicates each of these fundamental principles.

However, allowing a claim by a child whose inheritance fails because of negligent oversight of the execution formalities, or for unnecessary payments due to ignorance of estate tax law implicates none of the fundamental principles.

One fact is clear, however. Will drafters need not be as concerned as other legal, medical, accounting, or other professionals when it comes to claims that they have been careless in their work.

Even a decedent's children may be barred from recovering damages resulting from an estate planner's lack of care.

Edward "Ned" Notis-McConarty, a partner at Hemenway & Barnes in Boston, is a civil litigator with a concentration on matters of probate and fiduciary law. He is a member of the Boston Bar Association Section on Civil Litigation, and of the Massachusetts Bar Association on Probate Litigation Subcommittee. He is also past chairman on the BBA Task Force on Unrepresented Litigants and the Joint Bar Committee on Judicial Appointments.

Reprinted with permission from Lawyers Weekly Publications, 41 West Street, Boston, Massachusetts 800-444-5297