Taxation & Estate Planning

Chang v. Lederman: Estate Planning Malpractice Case

By Joel A. Schoenmeyer

Here is an interesting summary of a California legal malpractice case, Chang v. Lederman. The case involved an attorney named Gregory Lederman, his client Raphael Schumert, and Mr. Schumert's girlfriend (later wife), Myung Chang.

Chang alleges in her complaint that in February, 2005, Schumert instructed Gregory Lederman, as his attorney, to revise the trust to provide for distribution of the entire estate to Chang, with the exception of $250,000 to be distributed to his son. According to the complaint, Lederman refused to do the amendment stating that an Etti Hadar would sue Schumert and also advised that a psychiatric evaluation be done before any changes be made to his estate plan. Schumert died on March 17, 2005.

Estate planning is a big area for legal malpractice claims. Many of these claims are brought by beneficiaries of an individual's estate plan (as the article mentions, the privity of contract required in other malpractice actions is relaxed for an action against an estate planner).

It's hard for me to fault Mr. Lederman here. It's one thing to say "I as beneficiary am receiving less because you the attorney screwed up my husband's Will." But Ms. Chang appears to be saying "I as beneficiary am receiving less because you the attorney weren't sure if my husband was competent to sign his Will." Ms. Chang is essentially asking Mr. Lederman to put her interests above the interests of his client, Mr. Schumert. Put another way (in the article):

To extend liability in favor of a beneficiary who alleges that the testator meant to provide for him would place counsel in the awkward position of being sued for doing what a testator had actually asked him to do.

On a slightly different topic, the words "psychiatric evaluation" caught my eye in this article. I'm not a doctor in real life, nor do I play one on TV. But I do view it as my duty to make sure, in my own possibly clumsy way, that a client seems competent to execute his or her estate plan.

Let me give an example: a few weeks ago I met with a potential client. The meeting took place at his niece's home, where he lives. The niece was also the one who set up the meeting. The potential client was in bed for the entire meeting, seemed disoriented, and didn't seem to know about or be interested in signing a Will. While he seemed to want to leave his property to his niece (once I explained his options to him), I didn't feel confident that he understood what he owns and what would happen to that property at his death. So, I decided to pass on this potential client. I am certainly not saying that the niece did anything wrong, or that the potential client was totally incapable of signing a Will. Rather, I was saying that I wasn't going to be the one to draft it.

Full post as published by Death and Taxes Blog on May 07, 2009 (boomark / email).