Sorkowitz v Lakritz, Wissbrun & Assocs

BY KENNETH M. WISSBRUN

On order of the Court, leave to appeal having been granted, 472 Mich 898 (2005), and the briefs and oral argument of the parties having been considered by the Court, we REVERSE the April 27, 2004 judgment of the Court of Appeals and REINSTATE the order of the Oakland Circuit Court granting defendants' motion for summary disposition. Mieras v DeBona, 45£ Mich 278, 303 (1996) (a beneficiary may not "use extrinsic evidence to prove that the testator's intent is other than that set forth in the will").

KELLY, J., dissents and states as follows:

The Court should not rule on this case peremptorily. The case raises important issues about legal malpractice and about standing in certain estate planning controversies. It deserves plenary treatment.

Here, the plaintiffs on appeal are beneficiaries, trust estate, and estate representatives. They appealed from a grant of summary disposition in favor of defendants, the attorneys who drafted a trust. Their suit claimed that defendants committed malpractice by failing to advise the testators concerning the consequences of not including a " Cr ummey trust " clause1 in the trust. Plaintiffs contend that the absence of a Crummey clause resulted in a trust estate tax liability of between $1 million and $1.5 million. The Court of Appeals majority ruled for plaintiffs, setting aside the trial court's order of summary disposition.

Defendants have appealed to this Court to seek reinstatement of the order of summary disposition, asserting that there is no admissible evidence of malpractice. Th is Court disposes of the case by relying solely [Page 926] on the four-corners rule expressed in Mieras v DeBona. 452 Mich 278 (1996).3 That reliance is misplaced because it ignores the distinction between erroneous trust preparation and erroneous tax advice in the preparation of a trust. Miera s involves the former; this case involves the latter.

It is beyond argument that people seek the advice of a lawyer in the preparation of a trust in large part to safeguard their assets from loss. A major ingredient in the lawyer's advice concerns the tax implications of possible trust provisions. It is also without question that most people wish to avoid the burden of taxes to the extent the law allows. It is far more likely that any given testator intends to avoid taxable events than it is that the testator is indifferent to them. It would be foolish for the Court to ignore these truisms.

In this case, it is claimed that the lack of a Crummey clause increased the estate's tax liability by a million dollars or more. But the majority's action today means that no hearing will ever be held to determine if defendants advised the testators about the need for a Crummey clause. The adequacy of the tax advice that defendants gave to the decedents will never be plumbed . This is both unwise and unfair to plaintiffs. The Court of Appeals acted correctly in remanding the case to the trial court for further discovery and for identification of the proper parties.

It is obvious that this case raises important questions regarding legal malpractice in the area of estate planning. If courts are limited to the four corners of a trust to find malpractice for negligent tax advice regarding the trust, the attorney giving the advice could escape all liability. As long as the malpractice is not discernible on the face of the document, the attorney will be protected. It seems obvious that such vast protection prejudices the interests of people seeking the expert tax advice of estate planning attorneys specifically and harms the legal profession in general.

I understand the concerns of the attorneys in this practice area. And I do not wish them to have any less protection than that enjoyed by their colleagues in other areas of the law . Conversely, estate planning attorneys should have the same degree of accountability for their errors as do all other attorneys.

I agree with the Court of Appeals majority that the Mieras four-corners rule is inapplicable to this case. Unlike Mieras, which involved trust preparation, this case involves alleged malpractice for faulty tax advice. The question of standing should be resolved only after further discovery in the trial court. Consequently, summary disposition for defendants was erroneously entered.