MO: Underlying trusts and estate
Facts: The Pattersons retained attorney Checkett to help with their estate planning. After the Patterson’s indicated what they wanted to be placed into the trust, Checkett sent them a letter indicating what could be done with the IRA and verifying that what he had suggested in a previous letter had been done; if so, he informed them that the trust was set-up. To that, the Patterson’s informed him that they had funded their trust. Checkett closed their file.
Several years later, the Patterson’s requested an amendment to the trust. They inquired of Checkett whether or not they should include the their IRA and Keough (the annuities) in the trust. Checkett said no due to the tax consequences. Dr. Patterson, however, died prior to signing the trust amendment, at which point Mrs. Patterson learned that the trust had not been properly funded. As a result, Checkett suggested a post-mortem estate plan that would treat the trust as though it had been executed prior to Dr. Patterson’s death and fully fund the trust.
The estate was severely taxed.
Issue: Whether the placement of the annuities into the trust, resulting in a substantial tax, fell below the standard of care.
Ruling: No. In order to prove negligence, a plaintiff must show that a duty existed that the defendant failed to perform. As a result of that breach in duty, the plaintiff suffered damages. In order to show such a breach in a legal malpractice claim, expert testimony is needed.
Mrs. Patterson did not provide expert testimony to indicate that Checkett’s advice concerning the annuities was improper or below the standard of care. While Checkett advised the Patterson’s of the tax implications of placing the annuities into a trust, there was not enough money in their trusts without the inclusion of those annuities anyway. As a result, the Patterson’s would have been taxed in either circumstance. Checkett therefore cannot be held responsible for any tax consequence incurred.
Lesson: Where a client cannot show that the attorney’s acts would have resulted in damages, or had damaged him/her, there can be no recovery for legal malpractice.
Posted in: Wills Trusts & Estates