Imagine the following scenario. Your elderly mother, your only surviving parent, wants to have a discussion with you about her estate plan. She shows you her will and explains her intentions. You look at the will and it seems to make sense. She tells you she is leaving her estate to you upon her death. She even provides you with a copy of her will and tells you where the original is. You feel peace of mind knowing that your mother’s estate is (or should) be in order.
A short time later, your mother dies. You have no idea what to do next so you take your mother’s will to a local attorney. The attorney looks it over and informs you, with great regret, that her will leaves you nothing, or substantially less than your mother had told you it would. Your mother’s estate is instead going to some person you do not even know. You know this is not what your mother wanted. Is there anything you can do?
The Supreme Court of Virginia recently reviewed a similar situation in the case of Thorsen v. Richmond Society For The Prevention Of Cruelty to Animals, No. 150528, 2016 WL 3131004 (Va. 2016). In this case, a woman named Alice hired an attorney to prepare a will for her. It was undisputed that Alice wanted to leave her estate to her mother, should she survive Alice. If her mother did not survive her, Alice wanted her estate to go to the Richmond Society For The Prevention of Cruelty to Animals (“Richmond SPCA”). The lawyer prepared the will and Alice signed it.
A few years later, Alice died. Alice’s mother had predeceased her. Upon Alice’s death, there was a dispute as to who would receive varying assets of Alice’s estate. The Richmond SPCA argued it should have received all of Alice’s estate, worth approximately $675,000. However, based on the wording of the will, the Circuit Court decided that Alice’s will gave the Richmond SPCA only her tangible personal property, worth around $70,000.00. The Circuit Court decided that Alice’s real estate (worth around $600,000.00) passed to Alice’s heirs at law and not the Richmond SPCA. The Richmond SPCA sued the lawyer who drafted Alice’s will under a theory of breach of contract. Although the Richmond SPCA did not have a contract with the lawyer, the Richmond SPCA argued it was an intended third party beneficiary of Alice’s contract with the lawyer and the will itself. The case was tried and the Circuit Court ultimately entered judgment against the lawyer in the amount of $675,425.50 in favor of the Richmond SPCA.
The lawyer appealed the decision to the Supreme Court of Virginia. The lawyer argued that he could not be liable to the Richmond SPCA because he had not entered into a written agreement with the Richmond SPCA with respect to the will. The Court rejected this argument and held that Virginia common law permits intended third party beneficiaries to contracts (such as the Richmond SPCA) to sue to enforce the contract. The Court held that, based on Alice’s undisputed intent, the Richmond SPCA was clearly an intended third party beneficiary of the oral contract to make the Will and could therefore sue to enforce the contract and the will. The Court held that the Richmond SPCA was an intended third party beneficiary even though the Richmond SPCA was merely a contingent beneficiary (one not guaranteed to take under the will).
The lawyer also argued that he was not liable to the Richmond SPCA because the statute of limitations had expired. He drafted the will for Alice in 2003. He argued that any claim must have been brought within three years of that date. The Court was not convinced and held that the statute of limitations for the breach did not begin to run until Alice’s death in 2008. The Court made clear that a beneficiary’s cause of action relating to an improperly drafted will cannot possibly arise prior to the death of the testator. In sum, the Supreme Court of Virginia upheld the trial court’s decision and affirmed the judgment of over $600,000.00 against the lawyer.
This decision serves as a stern warning to estate planners. The General Assembly of Virginia may pass legislation addressing the issues raised in the Court’s ruling. However, in light of this case, estate planners must be increasingly cognizant of potential claims by purported intended third party beneficiaries to wills. In the litigation realm, this case could open the floodgates for lawsuits brought by frustrated intended beneficiaries against estate planners and their law firms.
