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2004 SESSION

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HB 1063 Estates; damages resulting from legal malpractice concerning irrecovable trusts.

Introduced by: Ward L. Armstrong | all patrons    ...    notes | add to my profiles | history

SUMMARY AS PASSED HOUSE:

Legal malpractice; negligence concerning an irrevocable trust. Clarifies that a grantor, or, after his death, his personal representative or trustee, may maintain an action for damages, including tax liability, resulting from legal malpractice associated with an irrevocable trust. The action shall survive the grantor's death, shall accrue upon completion of the representation in which the malpractice occurred, and shall be brought within five years (written contract for legal services) or three years (unwritten contract). No action may be maintained where damages reasonably may be avoided or result from a change of law subsequent to the representation in which the damages were sustained. The bill contains a clause stating that it is declaratory of existing law.

The bill modifies the result in the Supreme Court's decision in Charles Rutter, Executor of the Estate of Mildred Duncan v. Jones, Blechman, Woltz & Kelly, PC, et al., 264 Va. 310, 568 S.E.2d 693 (2002). In Rutter, plaintiff executor sought to assert a claim of legal malpractice concerning a revocable trust on the grounds that negligent drafting cost the estate more than $600,000 in tax liability. The Supreme Court held that no cause of action could have accrued during decedent's lifetime because damages were not sustained until her death triggered the tax liability. Because no cause of action existed during decedent's life, § 8.01-25 directed that no cause of action survived her death. This bill ensures that Rutter is not extended to cases involving irrevocable trusts.

SUMMARY AS INTRODUCED:

Legal malpractice; negligent drafting of testamentary instrument. Clarifies that an executor or personal representative of a decedent whose estate has sustained injury may assert a cause of action for legal malpractice based on negligent drafting of a testamentary instrument, and that a grantor may assert a claim where the damages are known but not yet incurred. This part of the bill specifically addresses the problem of irrevocable trusts and living plaintiffs. The bill clarifies 8.01-281 by (i) creating a new Code section addressing future potential liability that incorporates existing statutory authority in § 8.01-281 (which permits assertion of a cause of action based on future potential liability) and (ii) modifying accrual provisions to ensure consistency with subsection A of § 8.01-281 (which provides that "it shall be no defense [to a claim based on future potential liability] that the party asserting such claim, counterclaim, cross-claim, or third-party claim has made no payment or otherwise discharged any claim as to him arising out of the transaction or occurrence").

The bill modifies the result in the Supreme Court's decision in Charles Rutter, Executor of the Estate of Mildred Duncan v. Jones, Blechman, Woltz & Kelly, PC, et al., 264 Va. 310, 568 S.E.2d 693 (2002). In Rutter, plaintiff executor sought to assert a claim of malpractice against the attorneys who prepared a revocable trust on the grounds that negligent drafting cost the estate more than $600,000 in tax liability. The Supreme Court held that no cause of action could have accrued during decedent's lifetime because damages were not sustained until her death triggered the tax liability. In effect, the Supreme Court held that decedent could not have asserted a claim for future potential liability before she died. Because no cause of action existed during decedent's life, § 8.01-25 directed that no cause of action survived her death, and the judgment for defendants was affirmed.