Attorney’s Duty to Beneficiaries Becomes Murky When Effectuating Testator’s Intent

Typically, the relationship between an attorney and a client and the extent of the representation is pretty straightforward. Issues can arise, however, when clients have multiple roles that may create conflicts of interest in the representation.

In this case, the plaintiff was the decedent’s daughter and was also the executor of the decedent’s estate. She also was a beneficiary under the decedent’s will. These two roles were conflicting in this situation due to the decedent’s stated intentions. The problem arose when the decedent’s attorney did not carefully explain the limit of his representation to as assisting her in her executor role in settling the estate and the potential need for her individual counsel regarding her specific inheritance.  The executor brought a legal malpractice suit against the estate’s attorney for failing to notify her that the option to purchase the farmland by her brother may have had some improprieties in which she and another beneficiary should have received more money from the sale. The option was set up by her father, the decedent, and drafted by the defendant attorney who she hired to assist in handling the estate.

Before his death, the decedent executed a will naming the executor and her two brothers as equal beneficiaries of the residue of his estate. The decedent also established a long-term lease between himself and one of his sons. The lease contained an option to purchase the farmland for $200,000. A few years later, the decedent died. The executor hired the decedent’s attorney to be the attorney for the estate. The brother exercised the option to purchase the farmland as established under the lease. The beneficiaries signed a warranty deed and the attorney was involved in the transaction.  The executor/beneficiary discovered after signing the warranty deed that there may have been some improprieties with the option to buy because the option was priced much lower than the open-market price. The executor/beneficiary hired a different attorney and settled the dispute with her brother for another $20,000.The executor filed suit against the estate’s attorney for his malpractice in “representing her in the probate of her father’s estate and legal matters surrounding the estate and her inheritance.” Her claim was that he failed to inform her of potential conflicts of interest and the effects of legal enforceability of the option and failed to advise her to consult with another attorney regarding the matter.

The trial court granted summary judgment to the attorney finding that the attorney was hired to represent the executor in her capacity as executor for the estate, not to represent her personally. The court held that the attorney did not have a duty to the executor personally to advise her about any actions to challenge the lease because his duty extended only to her role as executor of the estate.

On appeal, the court reversed the award of summary judgment. The court held that the duties owed to the beneficiary were a question of fact that could not be resolved by summary judgment. The court found important that the attorney never explicitly stated that he advised the beneficiary that his representation was limited to her role as executor and that she consented to the scope of the representation. In fact, the court relied on the plaintiff’s affidavit in which stated she believed the attorney represented her in a broad context and did not inform her that she should seek outside counsel for her personal interests in the estate.

A dissent was also filed. In it, the judge stated that the facts showed no duty was owed. The attorney was hired by the executor’s father, the decedent, to execute the lease agreement that included the option to purchase. Previously, the court has ruled that the expanded duty owed to an individual other than a client by an attorney can extend to an heir only if the testamentary instrument is invalidated due to attorney error. In this case, there was no evidence that the estate was mishandled in any way.  The lease and option to purchase was intended to allow the son to purchase the land and there was no duty on the attorney’s part to try to maximize the beneficiary’s share of the estate by attacking the instrument drafted to accomplish the testator’s intent. The dissent pointed out that to create a duty under these circumstances would put any attorney in an impossible conflict between carrying out the express intent of the testator and benefitting some beneficiaries at the expense of others. Expanding the duty outside the role of assisting the executor in carrying out her duties puts every estate planning attorney who drafts a will or establishes an estate plan for a client would later have to defend the plan because of the new duty owed to beneficiaries affected by the plan.

Recent cases seem to show the court expanding duties owed by professionals to individuals is expanding. It would be beneficial to practitioners and clients to discuss the scope of representation in each situation and reduce it to writing so there are no misunderstandings later. Sabin v. Ackerman, No. 2-941, 2013 Iowa App. LEXIS 82 (Iowa Ct. App. Jan. 9, 2013).