A decision of major importance concerning estate planning has come down from the New York State Court of Appeals. InThe Estate of Saul Schneider v. Victor M. Finmann N.Y.3d 2010 N.Y, Slip Op 05281     decided this past June 17th , the court held that the legal representative of a decedent stands in  that person’s shoes for the purpose of being able to maintain a malpractice action against the decedent’s estate planner where improper advice or negligent estate planning has resulted in a loss. The court was clear in differentiating a claim by the estate’s executor or administrator from a claim brought by a beneficiary of the estate. 

The court based its findings on the concept of privity, or the relationship between the parties in a lawsuit which entitles one to sue. It made a clear distinction in the case of an executor who, for all intents and purposes, is the decedent him or herself for the purpose of winding up earthly affairs. The mere occurrence of death should not bar the decedent’s legal representative from maintaining an action for malpractice which the decedent would have had in life. A beneficiary of the estate, however, never had the privity –or relationship– with the estate planner which gives rise to the legal ability to maintain the lawsuit. Therefore, while estates will now be free to sue the estate planners for malpractice, the beneficiaries of the estates have not acquired this right.

This decision certainly is a red flag which warns us to take great pains in ascertaining that the advice and assistance we provide as estate planners is accurate. Keep in mind that the lawyer, accountant or planner who has enjoyed a long and warm relationship with a client who might tend to be forgiving when mistakes  are made (or whose actual directions might have contributed to the very actions complained of at some later date) is no longer with us when the problem arises. His or her executors and administrators might be far less familiar, friendly and forgiving when the chickens come home to roost.