A Lawyer's Duty of Loyalty After Preparing Husband and Wife Wills

Professor Beyer in Wills, Trusts & Estates Tax Prof Blog wrote about a case in which a Texas jury awarded $3 million dollars, including a total of $2 million in punitive damages, against a lawyer and his law firm for breach of fiduciary duty (or duty of loyalty) to the firm's client, after the lawyer drafted a will for the client's wife in which the wife changed her beneficiary from her husband to her mother. Professor Beyer's post is here.

The husband and wife had previously jointly retained another lawyer at the same firm for their estate planning, and they had signed wills leaving their estates to each other.

The wife's mother later contacted a different lawyer at the same firm, who prepared a will for the wife leaving her estate to the mother. The wife signed the new will. Apparently, the lawyer did not discuss the will or the tax implications of leaving her estate to her mother with the wife. The husband did not find out that his wife changed her will until after she died.

Although this case has no value as a precedent in British Columbia, and punitive damages are less common and more modest in British Columbia than I suspect they are in Texas, this case raises ethical issues which also apply to British Columbia lawyers.

The first problem is that the lawyer apparently took instructions to prepare the will from the beneficiary rather than the wife. A lawyer has a duty to take steps to see that the will reflects his client's intentions (in this case the wife's intentions), and that the client has capacity to make a will.

The second problem is more interesting. When a couple retains a lawyer to give estate planning advice and draft wills for the couple, the lawyer and the lawyer's whole firm owes an undivided duty of loyalty to both spouses. In preparing a will for the wife only without the husband's knowledge, the law firm breached its duty of loyalty to the husband.

It is irrelevant that in this case a different lawyer at the same firm prepared the new will for the wife. A law firm has a responsibility to have a good system in place to avoid conflicts of interest such as the one discribed in Professor Beyer's post.

When, if ever, does a joint retainer conclude, allowing the lawyer to draft a new will for only one of them without the other's knowledge or consent?

Does it conclude if the couple separate? I doubt it.

What if the couple separate and enter into an agreement that neither has a further claim on the other's estate?

What if they divorce?

In most cases, I suspect few lawyers would be concerned about doing a new will for the survivor, after the other spouse has died. But what if the lawyer, or another lawyer at the same law firm, had prepared an agreement for the couple that the survivor would not revoke his or her will? (See my earlier post on agreements not to revoke here.) Does the lawyer then owe any duty to the intended beneficiaries of the agreement not to revoke?

What if a couple does not jointly retain a lawyer, but each separately goes to the same lawyer or law firm for estate planning advice and wills? In that case, does the law firm have any obligations when giving advice to one of them, to consider the other's interest?

Although I have some tentative views on these questions, I don't pretend to have all of the answers. If anyone reading this post has some thoughts on these issues, I am interested in reading your comments.

(Since I wrote the above post, I have written a follow-up post here.)