Background
The United States is currently experiencing one of the largest transfers of wealth in history as aging baby boomers are passing on their wealth and transitioning the ownership of their businesses. The increasing number of these transactions has caused an uptick in the number of claims made against trust and estate attorneys.
The spike in claims is likely due to the sheer volume of these transactions and the accompanying increased risk of family members (and other interested parties) arguing over the estate, and then blaming the attorney if they do not receive the bequests or other benefits they expected.
Types of Legal Malpractice Claims
The following are a few of the many claims against trust and estate lawyers that have been arising and should be considered when evaluating whether your practice has adequate legal malpractice coverage:
1. Issue: In trust and estate matters, the parties may be in total agreement, only to suddenly begin arguing. In certain circumstances, your law firm can be sued by multiple parties, so these arguments can turn into a major problem for you.
Suggestion: It is good practice for a Trustee or Executor to have the court approve every action taken, even if the heirs or beneficiaries are aligned and currently getting along.
2. Issue: Recent legal malpractice claims have included elder abuse allegations when an attorney was acting in a fiduciary capacity for a senior. These claims have included an “aiding and abetting” theory if the attorney was alleged to have facilitated questionable care or financial decisions.
Suggestion: Your law firm should carefully communicate with elderly clients, who may have more specific or complex questions, so that there is a clear record of advice given. For instance, communicate regularly, make sure to keep detailed written records of meetings, and notarize communication documents.
3. Issue: Conflict allegations may arise if it appears that the attorney’s loyalty was split among family members.
Suggestion: You should carefully consider all risks before agreeing to serve as a Trustee or Executor. When possible, keep children and/or beneficiaries off correspondence — especially if they could benefit to the detriment of other siblings or family members — when communicating with the representative of the estate.
Your Defense Against Legal Malpractice Claims
Due to increased claims activity, some insurance companies have stopped covering these and similar exposures for trust and estate attorneys. Therefore, it is important to work with an insurance broker that knows the marketplace and can get you the coverage you need.
PSA works with many firms in the Mid-Atlantic region, and we know the challenges in finding adequate legal malpractice coverage for trust and estate attorneys. If you have any questions regarding trusts and estates or other legal malpractice insurance matters, please reach out to Steven Sherman, JD / 443-722-7467 / ssherman@psafinancial.com.
