It is not uncommon for beneficiaries of a will or trust to become concerned about the reduction of their inheritance based upon taxes, fees, and other expenses. Or, if someone like a probate lawyer makes a mistake which costs the estate money, or you, an heir, or beneficiary, an inheritance. Under Florida law, many fees are chargeable to an estate or trust (for instance, attorney’s fees, personal representatives fees, trustees fees) so long as they are reasonable and proven by competent evidence or consented to by the interested persons who ultimately bear their cost.
There are times when the document (will or trust) itself causes a reduced inheritance because of the way in which it was drafted. What if your mom or dad’s will or trust was drafted incorrectly, or negligently, by a Florida estate lawyer? What if the Florida estate planning attorney made a mistake in your parent’s will or trust with the tax provisions? An example of this may be due to the US Federal Estate Tax or the Gift Tax. Does a beneficiary have a cause of action, or a lawsuit, against your parent’s estate attorney who wrote the will or trust? … because of the reduced inheritance caused by taxes based upon a trust drafted improperly?
Consider the following facts: an individual hires a Florida probate attorney to provide estate planning services. As part of these services, a charitable remainder trust is drafted as a method to save on federal estate taxes. Or perhaps there is a marital trust, where the marital deduction is not obtained. The trust is drafted, but because it did not comply with relevant mandatory requirements set forth by the U.S. Tax Code, the bad estate planning resulted in the imposition of $72,000 in taxes after death that could have been avoided (and were expected to be avoided by the decedent).
In Gallo v. Brady, 925 So. 2d 363 (Fla. 4th DCA), the Fourth District Court of Appeal was faced with similar facts. The personal representative of the estate brought a legal malpractice claim in the trial court against the drafting attorney alleging (1) the purpose of establishing the charitable trust was to save on federal estate taxes; (2) the trust failed to comply with mandatory requirements set forth by the United States Tax Code and related regulations; and (3) as a consequence of the trust’s deficiencies, a tax deduction was not available to the estate and the estate paid in excess of $72,000 in estate taxes that could have been avoided but for the drafting attorney’s negligence. Id.
The trial court entered summary judgment in favor of the drafting attorney as it found that malpractice could not be established because the trust did not state that its purpose was federal estate tax savings and the grantor’s intent could not be established by extrinsic evidence.
The appellate court reversed the summary judgment entered by the trial court. In doing so, the Palm Beach appeals court, Florida’s 4th DCA, stated that while generally a legal malpractice claim may only be brought by one in privity with the attorney, there is an exception that permits an intended third party beneficiary of the legal services to bring suit where “testamentary intent as expressed in the will…[was] frustrated by the attorney’s negligence and as a direct result of such negligence the beneficiaries’ legacy [wa]s lost or diminished. Id. at 364 (citing Angel, Cohen & Rogovin v. Oberon Inv., N.V., 512 So. 2d 192, 194 (Fla. 1987) (stating the most obvious example of this exception is in the area of will drafting)).
One of the most common questions, from a Florida legal malpractice point of view, is that of standing: who has the legal ability to bring a lawsuit against an estate planning attorney? Certainly, the estate can, or the executor or the personal representative of the estate can. But what about estate or trust beneficiaries? And what are the damages to your Florida attorney malpractice case?
If you are the beneficiary of a will that does not appear to comply with the testator’s intent because of a drafting error, consult an experienced probate litigation attorney to educate yourself regarding your options at law.