Generally, estate planning attorneys who draft California Trusts and Wills can only be sued for legal malpractice by the client who hired them. But there is a narrow exception to this general rule where an estate planning attorney’s mistake harms “intended beneficiaries” of the Trust or Will—even though the intended beneficiaries were never the attorney’s clients.
A balancing test is used to determine if an estate planning attorney is liable to non-client intended beneficiaries of a Trust or Will. The balancing test includes six factors:
- The extent to which the transaction was intended to affect the Trust or Will beneficiary or beneficiaries;
- The foreseeability of harm to the Trust or Will beneficiary due to the legal malpractice;
- The degree of certainty that the beneficiary suffered injury due to the estate planning attorney’s legal malpractice;
- The closeness of the connection between the estate planning attorney’s conduct and the injury to the intended beneficiary;
- The policy of preventing future harm; and
- Whether the recognition of liability on the estate planning attorney would impose an undue burden on the legal profession.
For example, under the balancing test, legal malpractice likely occurs to intended beneficiaries where an estate planning client states to an estate planning attorney that it is his intent to give 50 percent of the family home to client’s now second wife, and the remaining 50 percent to his two children, and the estate planning attorney drafts the following terms in the Trust or Will instrument:
I hereby give 50 percent of the family home to my lovely wife, and the remaining 50 percent to the beneficiaries of this Trust.
The problem with this language is that the term “beneficiaries” includes the wife in the remaining 50 percent intended for the two children. The two children are now required to share 33 percent of their intended gift with the wife who is already receiving 50 percent of the family home. The estate planning attorney should have used the term “children” for the remaining 50 percent interest of the family home. Because the estate planning attorney did not use a precise term, the two children have been harmed by the attorney’s drafting mistake. Accordingly, the estate planning attorney is liable to the intended beneficiaries—the two children—for the 33 percent loss to their combined interest in the family home.
What are the losses to the two children? If the family home is worth $1.2 million, 50 percent was intended to go to the second wife resulting in a gift to her of $600,000, and the remaining 50 percent, based on the drafting error, would be divided in three ways between the two children and wife, resulting in gifts of $200,000 each. Thus, the damages from the drafting error are $100,000 to each child, as they should have received $300,000 each.
Ultimately, intended beneficiaries may hold an estate planning attorney liable for drafting errors when the six balancing factors are met. Of course, there must be damages worth pursuing in court because these types of lawsuit are never easy or cheap. But when an intended beneficiary is harmed, she has rights she can assert.