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Category Archives: Malpractice

Avoiding Estate Planning Litigation Paper Published

GERRY W. BEYER, Governor Preston E. Smith Regents Professor of Law; Texas Tech University School of Law, has published Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns. Below is the abstract of his paper:

An estate planner may become a defendant in a case involving an estate he or she planned in two main ways. First, the attorney may have performed his or her services in a negligent manner potentially creating exposure to malpractice liability. Second, the attorney’s conduct may have lapsed below ethically acceptable standards.
This article reviews the exposure an estate planner may have to malpractice liability with emphasis on Texas law and then focuses the reader’s attention on ethical issues that may arise while preparing or executing the plan. I hope that by pointing out potentially troublesome areas, the reader will avoid the ramifications of drafting a flawed estate plan or having a lapse of ethical good judgment which may lead to the frustration of the client’s intent, financial loss to the client or the beneficiaries, personal embarrassment, and possible disciplinary action.

Reliance on legal advice is no excuse for failure to file.

In the United States Tax Court case of Pamela B. Russell, Petitioner v. Commissioner, the Court found for the IRS in ruling that the defendant’s reliance on her tax lawyer’s advice to delay filing of her tax return did not qualify as “reasonable cause” for failure to file a timely return. [editor’s note: David Russell is not related to the petitioner.]

Section 6651(a)(1) imposes an addition to tax for the failure to file a required return timely unless the taxpayer can establish that such failure was due to “reasonable cause and not due to willful neglect”.  United States v. Boyle, 469 U.S. 241, 245 (1985).

Although the statute speaks of willful neglect, no finding of willfulness is necessary to hold a taxpayer liable for the addition to tax. Rather, taxpayers must prove that their failure to file on time “did not result from carelessness, reckless indifference, or intentional failure.” Commenting on a taxpayer’s reliance on legal advice, the Court stated,

Courts have frequently held that a taxpayer’s reasonable reliance on the advice of an accountant or attorney regarding a question of law, even when such advice turns out to be mistaken, constitutes “reasonable cause” and is consistent with “ordinary business care and prudence”. Requiring taxpayers to challenge their attorneys or seek second opinions would negate the purpose of relying on an expert, and such actions are not necessary under the standard of “ordinary business care and prudence”

In this case, the Petitioner claimed reliance on the advice of her tax attorney to delay filing as “reasonable cause” for failing to file (or pay towards) her 2001, 2002 and 2003 tax returns. Her argument was based on three claims, each of which the Tax Court denied as “reasonable cause.”  In the end, the Petitioner was liable for both failure to file and failure to pay penalties. Caveat Emptor!

Read the full case here.

Guilty Verdicts Appealed in Brooke Astor Will Case

The New York Times reports that the lawyers for Brooke Astor’s son and for a lawyer who did estate planning for her filed a lengthy appeal to their convictions on Monday.

The appeals, filed with a state appellate court in Manhattan, said that the convictions of Mrs. Astor’s son, Anthony D. Marshall, and the lawyer, Francis X. Morrissey Jr., were not consistent with the evidence. The lawyers were essentially arguing that the jurors got it wrong.

Mr. Marshall and Mr. Morrissey were convicted in October 2009 on a series of charges that they had defrauded Mrs. Astor and stolen tens of millions of dollars from her as she suffered from Alzheimer’s disease late in her life. Mrs. Astor, the long-reigning queen of New York philanthropy and society, died in 2007 at age 105.

One of the biggest allegations against Mr. Marshall and Mr. Morrissey was that they had tricked her into signing an amendment, or codicil, to her will in January 2004 that directed millions of dollars their way. Mr. Marshall also was convicted of first-degree grand larceny for giving himself a $1 million raise for managing his mother’s finances. That conviction carried a mandatory prison sentence, and Justice Bartley sentenced both Mr. Marshall and Mr. Morrissey to the minimum of one to three years in prison.

For the complete article, click here.

“Veteran” CA attorney disbarred for marriage scam

A veteran Pacifica attorney is facing disbarment for allegedly duping an 85-year-old client into giving her $339,000, entering into a sham marriage with him and ignoring his will by having him cremated after his death.

Linda Lowney “took advantage of a lonely, sick old man” and thwarted his intent to transfer his estate to his nieces, Judge Pat McElroy of the State Bar Court said Friday.

She ordered the immediate suspension of Lowney, who has practiced law since 1978 and had no disciplinary actions on her record. The disbarment could be appealed to the state Supreme Court, but Lowney’s attorney, Jonathan Arons, said Tuesday he had little hope that such an appeal would succeed, despite his disagreement with the ruling.

Many of Tollefsen’s financial records were found to be shredded, the judge said.

Lowney also sued for a share of Tollefsen’s estate. A state appeals court ruled against her in 2009, suggested “financial abuse of elders” was involved and referred the case to the State Bar. Lowney’s attorney Jonathon Arons said Lowney hadn’t followed the legal procedures to transfer the $339,000, such as obtaining his written consent, “because she didn’t look at herself as a lawyer. She looked at herself as his spouse, or intended.”

Hat tip: Wills, Trusts, & Estates Prof Blog

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