Estate Administrator Pitfalls 

Analyzing trends over the previous five years, the broad practice area of estate planning, trust, and probate has become one of the top areas of practice for malpractice claims. Most errors fall into one of three categories: competence, conflicts, and clients. This week we’ll focus on a couple of issues involving substantive and procedural competence and how errors might be avoided. 

When serving as the administrator of an estate, or when representing an administrator of an estate, the attorney has a fiduciary duty to administer the entire estate in good faith, competently (Ohio R. Prof. Conduct 1.1) and diligently (Ohio R. Prof. Conduct 1.3).  

The American College of Trust and Estate Counsel (ACTEC) Foundation produces “The ACTEC Commentaries on the Model Rules of Professional Conduct” available here. In the Sixth Edition of the ACTEC Commentaries, attorneys are reminded that “informed consent” means that a client has agreed to a proposed course of conduct after the lawyer has “communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.” Practically speaking, when an attorney represents an administrator, that administrator should be provided reasonable information to understand risks and alternatives to the conduct that counsel has suggested. Counsel’s clarity on statutory requirements is a must to satisfy the requirements of competence and diligence. The Commentaries do provide that, an attorney “who initially lacks the skill or knowledge required … may overcome that inadequacy though additional research and study.”  Statutes governing the administration of an estate are nuanced and complex. For even experienced estate and probate attorneys, the Probate Code must be reviewed regularly and closely. 

1. Statute of Descent and Distribution 

Ohio’s Statute of descent and distribution or “statute of intestacy” establishes the legal standards for distributions from an intestate estate. An attorney administering an estate must take reasonable care to identify all heirs. If an heir is overlooked in administering an estate, that omitted heir could have a cause of action against the administrator.  

2. Resist premature distribution 

Attorneys must advise an estate administrator to resist pressure from beneficiaries or other pressures to distribute funds prematurely. Even though beneficiaries may be obligated to return funds after errant distribution, recovering prematurely distributed funds could prove difficult if not impossible. The administrator must ensure that distributions are made accurately and with appropriate authority, including being attentive to family allowance statutes. 

The ACTEC Commentaries remind us that, “the complexity of a transaction or its unusual nature generates uncertainties regarding the manner in which it will be treated for tax or substantive law purposes and may prevent an otherwise thoroughly competent lawyer from accurately assessing how the transaction would be treated for tax or substantive law purposes.” Consequently, attorneys are well advised to seek guidance from other professionals and colleagues in complex situations (with appropriate confidentiality protections taken) to avoid substantive mistakes. 

For Ohio Bar members, you may consider joining the Estate Planning, Trust and Probate Section in order to gain access to resources and experienced colleagues with an active discussion board. Check out the vast array of estate planning CLEs offered by the Ohio Bar and two upcoming Institutes: the Marvin R. Pliskin Advanced Probate and Estate Planning Institute on September 22 (In-Person or Streaming) and the 11^th Annual Great Lakes Asset Protection Institute on December 8 (In-Person or Streaming). 

As always, please feel free to reach out to experienced loss prevention attorneys here at OBLIC with your questions and concerns. We’re here to help! 

This information is made available solely for loss prevention purposes, which may include claim prevention techniques designed to minimize the likelihood of incurring a claim for legal malpractice. This information does not establish, report, or create the standard of care for attorneys. The material is not a complete analysis of the topic and should not be construed as providing legal advice. Please conduct your own appropriate legal research in this area. If you have questions about this email’s content and are an OBLIC policyholder, please contact us using the information above.