Sommers Schwartz attorneys Matthew Turner and David Black negotiated a $375,000 pre-suit settlement to resolve a family’s claim against an estate attorney for legal malpractice. 

Over a number of years, the estate attorney assisted a married couple with establishing and making multiple changes to their estate plan regarding the disposition of family-owned real property between their children. 

In 2010, the estate attorney drafted a family trust for the couple, which provided for the distribution of farm property to four of the couple’s six children. The estate attorney prepared six quit claim deeds, signed by the couple, that transferred title to the property to the trust.

In 2013, the couple asked the estate lawyer to make additional changes. The attorney prepared deeds to transfer the real property from the trust and back to the couple. She then prepared six new lady bird deeds that provided for the disposition of the property between the same four children explicitly included in the family trust. 

After the husband died in 2016, the surviving wife wished to change the property distribution from the 2013 arrangement and had the attorney prepare a “first amendment” to the family trust. The amendment clearly demonstrated the wishes of the wife regarding the distribution of the property and significantly altered the real property distribution among the children. To effectuate the wife’s desires, the attorney needed to either deed the property back to the trust or create new lady bird deeds establishing the desired distribution.     

The wife died in 2021, but because the estate attorney never prepared deeds (in conjunction with the first amendment) to transfer the property into the trust or create new lady bird deeds, the trust owned no real property to effectuate the first amendment’s objectives. As a result, the 2013 deeds controlled, and the two daughters who should have benefited from the first amendment to the trust in 2016 did not receive the designated property that was devised to them, nor did they enjoy the proceeds of the subsequent sale. In fact, a significant amount of the money was escheated to the State of Michigan because one daughter was a Medicaid beneficiary before her death, and her estate had to pay back the State of Michigan for her Medicaid benefits.      

The plaintiffs claimed that the estate attorney drafted the 2013 deeds and the first amendment to the trust and knew that the deeds had to be changed to effectuate her client’s intent. It was legal malpractice and a breach of fiduciary duty to fail to draft new deeds so the property would be transferred to the intended heirs and the money from the sale would not be lost to the State of Michigan.