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Verdict range $0 - $100,000
ARTICLE ID 167935
CONFIDENTIAL Legal malpractice - Failure to transfer decedent's life insurance policy to a trust results in avoidable tax on the estate of $________ - Third-party negligence claims against insurance agent who sold the policy and accountant who prepared estate tax returns.
Middlesex
The plaintiffs brought suit as the executors of an estate in which the deceased retained the defendant attorney to
prepare an estate plan. The plaintiffs alleged the defendant
failed to transfer the ownership of a life insurance policy from
the deceased individually to the trust. This action left the
policy as an asset of the estate and resulted in an avoidable tax
of $________. This case consisted of claims of legal
malpractice, breach of contract, breach of fiduciary duty and
violation of Massachusetts Protection Law 93A. The defendant
alleged the duty to transfer the policy to the trust lie with the
insurance agent who sold the policy, and the defendant filed a
third-party malpractice complaint against both the agent who sold
the policy and the accountant who had prepared the estate tax
return.
The insurance policy at issue was purchased in ________, and a trust
was subsequently drafted shortly thereafter. The deceased passed
away in ________ and it was at that time that the failure to transfer
the policy was discovered. It went undisputed that the defendant
attended a meeting, as the deceaseds counsel, with the insurance
agent where it was agreed that the transfer of the policy to a
trust was a favorable idea. The defendant then drafted the trust
and transferred another life insurance policy to the trust. It
was the defendants contention that he did not transfer the
policy at issue because he believed it had been previously
transferred.
The defendant claimed it was not his responsibility to transfer
the policy and contended he had only agreed to draft the trust
itself. The defendant argued the insurance agent failed to make
the transfer and that it was clear that he was the party
responsible for the insurance policy, evidenced by the fact that
he had previously made at least three other changes to the
policy. As for the defendants third-party malpractice claim
against the accountant, it was alleged that he had an opportunity
to file a petition with the IRS that would have informed the IRS
of the administrative oversight with the insurance policy and
would have petitioned the IRS to treat the policy as if it were
transferred. Because he failed to do so, it was alleged by the
defendant that he was also negligent.
The third-party defendant insurance agent motioned for summary
judgment, which was granted by the court on the basis that there
existed "no basis for a jury to find that special circumstances
of assertion, representation and reliance occurred which might
provide a basis for liability." The third-party defendant
accountant filed a motion to dismiss, which was granted on
grounds that while the IRS may have accepted a claim of
"administrative error," it was too speculative to determine
whether or not this would have occurred and therefore, it could
not have been presented before a jury.
On the defendants motion for summary judgment, the court ruled
that at most the defendant was merely negligent and therefore, no
claim under 93A existed. Additionally, it was ruled that the
allegations of breach of fiduciary duty and breach of contract
were duplicative of the negligence claim and therefore, were
additionally dropped. Yet, the claim of negligence against the
defendant stood as a triable issue.
This case would have proceeded to trial on the issue of legal malpractice, but settled pre-trial for a confidential amount.
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