Avoiding Communications Claims: Wills & Estates
No matter what the area of practice, the number one source of claims at LAWPRO is a breakdown in communication between the lawyer and client.
Between 2008 and 2013, nearly 4,600 communications claims – an average of 762 a year – have been reported to LAWPRO. The total cost of these claims to date is about $158 million – and likely to rise as more recent years’ claims are resolved.
In the Fall 2011 issue of LAWPRO Magazine we asked LAWPRO claims counsel with expertise in the various areas of law to provide insights into the communications mistakes they see in their daily handling of claims files. We hope this approach makes it easier for you to implement risk management steps in your own practice.
Cynthia Miller, unit director and counsel (PPL), Deborah Petch, claims counsel (PPL), and Pauline Sheps, claims counsel specialist (PPL) review the kinds of communication errors we see in wills,
estates and trusts practice.
Ask questions – many questions
The biggest communication issues take place at the time the will is being drafted. The claim may result from drafting errors, but often it was poor communication that led to the drafting error.
Too many lawyers, says Martin, are not truly listening to the client’s instructions and not probing and questioning the client to uncover facts that may cause problems later.
“It’s not so much the client not providing the information as the lawyer failing to communicate what the lawyer needs to know,” says Martin. “For instance, the client says: ‘I want to leave everything to my son.’ Fine, but does she have any other children? What did the prior will say?”
Are the beneficiaries identified correctly? (e.g., there is more than one St. John’s Church in the city.) Did the lawyer ask about gift-overs in the event that a beneficiary is not alive at the time the testator dies? When the will drafting is complete, lawyers should do a reporting letter to the client so that there will not be confusion in the future about why changes were made, which beneficiaries added or removed, and so forth.
LAWPRO has seen in an increase in claims resulting from lawyers failing to ask about client assets when drafting wills. Too many lawyers don’t ask the simple question: “What assets to do you have?” (Given how many people in Ontario now come from other jurisdictions, lawyers should be asking about assets on a worldwide basis.)
It’s equally important to discuss how these assets will be distributed. This issue often arises in the case of second marriages. The clients want to leave everything to their respective children, but often what happens goes something like this: after the husband dies, the wife says that she didn’t understand that the assets would go to his children and not her; or conversely, all the assets are in joint names and – despite the will – at the end nothing is left to go to the children.
“Ask what the assets are, and ask how they are registered,” says Sheps. “Some lawyers tell us they don’t ask ‘because the client will have different assets when they die.’ That’s not a good enough reason not to ask.”
Get clarification given complexity of family structures and dynamics
Lawyers are increasingly likely to be dealing with a variety of family structures other than the traditional nuclear family. When the client uses words such as “married” or “my daughter,” those words may not necessarily mean what the lawyer thinks. The marriage could be common-law, and the daughter could be a step-daughter.
To be absolutely sure of the nature of the relationships, ask questions and get clarification.
Talk to your client to understand family dynamics. You may discover information that could improve the advice you provide the client. If you know, for example, that two siblings don’t get along, it may not be wise to appoint them as joint powers of attorney or estate trustees.
“A dysfunctional family can lead to a dysfunctional estate,” says Sheps, who also recommends not agreeing to be an attorney or trustee if you know the family is fighting. “If they are not satisfied with the management of the estate, they will all blame you.”
State who is doing what
Miscommunication regarding pensions often results in claims. The client may have made designations for inheritance purposes on a pension, life insurance, RRSP, etc., but a will can revoke those designations. There is often not enough discussion with clients about these designations, and what effect a will can have on them. The clients themselves may not be certain how the designations are arranged, and it may not be clear who was supposed to find out (client or lawyer) and what the consequences are for not making certain.
When dealing with powers of attorney, it is important to communicate to the attorney the roles and obligations involved. Template letters and a checklist are very good tools for this. They protect the lawyer from future accusations that “the lawyer didn’t tell me I couldn’t spend the money this way.”
The administration of an estate also requires clear communication. Keep records of who is responsible for what, in terms of what the lawyer is doing and what trustee is doing. If roles are divided, the work and responsibilities should be spelled out.
“If the lawyer is taking on work normally done by the estate trustee, there has to be a letter setting out clearly who is doing what,” says Petch, who recommends communicating to your trustee client what you’ll charge in legal fees for this work.
“We get a lot of complaints about the mishmash of the lawyer’s fees and executor’s fees. This is particularly true where the lawyer is a co-trustee.”