There are several things that all estate planning attorneys (and those who advise them) need to be aware of in light of the Virginia Supreme Court’s recent ruling in Thorsen v. Richmond Society For The Prevention Of Cruelty to Animals, No. 150528, 2016 WL 3131004 (Va. 2016). My colleague Brett Herbert provided a helpful summary of the Court’s ruling in Thorsen in a prior blog post, which can be accessed here. This post shares some tips on how estate planning attorneys can attempt to minimize their legal exposure in light of the Thorsen ruling.
Estate planning attorneys would be wise to insert into their engagement letters a provision that explicitly states that they are only forming an attorney-client relationship with the person who is signing the engagement letter. Additionally, the engagement letter should clearly state that there are no intended third party beneficiaries of the relationship between the estate planning attorney and the client. This practice will help ensure that any future attorney-client relationships formed with clients will be more likely to fall outside of the reach of Thorsen’s holding, which permits claims by intended third party beneficiaries.
But what about those estate plans that were drafted previously, which may not be accompanied by an engagement letter that specifically provides that there are no intended third party beneficiaries of the relationship between the estate planning attorney and the client? Many estate planning attorneys have likely drafted thousands of estate plans currently in existence that, under the holding of Thorsen, could give rise to a claim even if they were drafted decades ago. Estate planners would be well advised to take several actions to try to mitigate their risk.
First, estate planing attorneys should consider whether they should take extra measures to save older files in order to attempt to preserve any documented evidence in them that would help rebut a claim by a third party that he was an intended beneficiary of an estate plan. Such a practice could be costly and a hassle, but if it could result in the preservation of documentation that would undercut a claim by a disgruntled beneficiary years down the line, it may be worth it.
Second, estate planning attorneys should be much more circumspect than previously when faced with any allegations of having not properly drafted an estate plan in accordance with the wishes of their now-deceased client. One of the things that undoubtedly contributed to the misfortune of the estate planning attorney in Thorsen was that when he realized that the plan he drafted was inconsistent with the wishes of his now-deceased client, he proactively sought to petition the circuit court to reform the Will (and lost). In doing so, he admitted that the Will he drafted was inconsistent with the wishes of his client, thereby providing an opening for the disgruntled beneficiary (who no longer needed to prove that issue).
Third, estate planning attorneys (and especially those who serve as fiduciaries in their clients’ estate plans) should prepare themselves for the reality that they may see more claims threatened against them or brought against them. This is especially the case in the context where an estate planning attorney agrees to serve as an executor, trustee, trust protector, or agent under a power of attorney. In contexts where an estate planning attorney is serving in a fiduciary capacity, a disgruntled family member may initially have a grievance against the estate planning attorney for an action that he did or didn’t take as a fiduciary. When that disgruntled person seeks out legal counsel to discuss bringing a claim against the fiduciary (who also drafted the estate plan), the legal counsel may likely, in light of Thorsen, also advise the disgruntled person to consider asserting a claim against the fiduciary / estate planner for having allegedly botched the drafting of the estate plan as well.
Will most of those claims of botched estate plans be valid? Not likely. However, it is an additional claim that can now be threatened against estate planners serving in a fiduciary role (assuming they also drafted the estate plan), even if it’s just a “throw-away claim” (that is asserted to enhance a party’s bargaining power). I have little doubt that we’ll see more threats of those types of claims, meaning that agreeing to serve as a fiduciary in a client’s estate plan just became more risky in light of Thorsen.