It isn’t often that a trust and estate attorney finds himself or herself on the wrong end of a lawsuit stemming either from a negligence or fraud claim made on behalf of beneficiaries, but it does happen.
Because these situations are often fraught with emotion and complex family dynamics, lawyers can sometimes find themselves pulled into a legal dispute with the beneficiaries of an estate.
A Family Affair
First Indemnity recently defended an action to remove the insured attorney as trustee. The court consolidated that removal action with two related cases that also involved the beneficiaries’ disputes over their father’s will and trust. One was an action brought by a group of siblings alleging another sibling exerted undue influence over the father. There was also a consolidated action to set aside the will, and to name the insured as a defendant solely based upon his status as the personal representative of the estate. Counsel’s assessment was that the insured did not have exposure in those parallel matters and had no real interest in the outcome.
Despite multiple efforts to extricate the insured from this family dispute, counsel was unsuccessful. At a recent court conference, the judge explicitly told the parties they risked wasting the assets of the estate through protracted litigation. Then, advising the parties and their counsel to work something out, the judge left the courtroom so the parties might find a resolution. The situation escalated, and sheriff’s deputies were forced to step in to clear the courtroom, ordering everyone to leave the courthouse separately due to safety concerns.
The insured attorney was, unfortunately, inextricably a part of this family drama.
These types of disputes rarely resolve quickly. They are lengthy, bitter and expensive fights involving beneficiaries who sometimes have competing priorities. And these matters often arise for a range of reasons.
Maybe the attorney misunderstood a tax implication or gave advice that resulted in a loss. Perhaps he or she failed to make a timely filing. More often, as in the example above, the insured’s attorney is simply caught in a lengthy and emotion-driven family dispute. While the insured may have done nothing wrong, it’s difficult to defeat such claims based on a discreet legal defense.
As in so much of the work of good lawyers, the best defense is having a sound understanding of the client and the work required from the outset.
Don’t take on such work if trusts and estates are not a mainstay of your practice. Before taking on this type of legal matter, take an opportunity to explore as much of the family make sure you do your due diligence. This includes not only understanding the deceased’s family relationships, but also making sure that the client, prior to death, does everything possible to make his or her wishes and directives known in advance.
Beyond trying to anticipate and head off possible family conflicts, documentation – as always – is essential. Document the initial scope of the assignment and the responsibilities of all parties. Outline potential risks and the client’s understanding of those risks – including advising the family of all directives. Finally, proactively document any potential or perceived conflicts.
During the initial client interview, if the client makes mention of any family conflicts, disagreements or notes severed relationships within the family, be sure to document these matters. Make note of these issues in your outline and of any potential risks or threats to the trust and estate plan you are being asked to create.
People are often at their best and worst when a death occurs, and often demonstrate both traits in equal measure. Having an advanced understanding of the family and other relevant relationship dynamics is essential and careful documentation of potential risks, conflicts or diregarded advice, can be crticial in protecting the trust attorney when the trust vanishes from a trust and estate matter.