Patricia Albanese died in 2000, leaving a substantial estate consisting of real estate, cash, stocks and bonds, life insurance and other assets—including an Individual Retirement Account naming her three daughters as beneficiaries. One daughter, Clara Heffernan, was named as Executrix of the Estate (what in Arizona would be called Personal Representative), and she retained John R. Lolio, her mother’s lawyer, to handle the probate.

It turned out that Ms. Albanese’s estate was large enough to require payment of $900,000 in estate taxes. According to the executrix, Mr. Lolio told her that the only way to raise enough cash to pay the estate tax liability would be to cash in Ms. Albanese’s IRA. She also insists that he did not tell her what would happen next—that she and her sisters would be liable for almost $300,000 each in income taxes.

Mr. Lolio’s version of the story was quite different—he insisted that he had discussed several options with his client, including the possibility of borrowing money against other estate assets, or selling real estate. More fundamentally, he argued that his duties to Ms. Heffernan as executrix did not include giving personal income tax advice.

Ms. Heffernan and her sisters sued Mr. Lolio, his law firm, and the financial planner who had handled her mother’s assets (and advised her after her mother’s death). The financial planner settled with her, but the lawyer and law firm moved to dismiss the complaint because the plaintiffs as individuals had not hired them. Their only duty was to the estate of Ms. Albanese, argued the law firm, and therefore they could not be sued by the heirs for their own personal losses.

The trial judge agreed and granted summary judgment in favor of the lawyers. The New Jersey intermediate appellate court (the Appellate Division of the state Superior Court) partially agreed, allowing the dismissal to stand as to Ms. Heffernan’s sisters but sending the case back as to Ms. Heffernan herself.

The problem with dismissing the case altogether, ruled the appellate court, was that Mr. Lolio’s retainer agreement with Ms. Heffernan says that the lawyers will advise her on “post-mortem planning, including, but not limited to, calculating tax needs.” Elsewhere, the agreement also promises advice that Ms. Heffernan could reasonably have taken to mean Mr. Lolio was promising to help her figure out the individual effects of handling her mother’s estate. Since he prepared the agreement, and she was not separately represented by counsel, ambiguities might reasonably be interpreted in favor of Ms. Heffernan, and the firm may have owed her some individual responsibility. Estate of Albanese v. Lolio, June 4, 2007.

Would you like to subscribe to Elder Law Issues? Simply provide your e-mail address and name below, and click "Subscribe". At the same time, you may choose to also subscribe to The Voice, the newsletter of the Special Needs Alliance.

Privacy note: We do not ever use your e-mail address or name for any purpose other than to send out our subscription-based newsletter. You can rest assured that we will not sell, trade or share this information with any other person or entity. We have no ancillary or associated companies or entities to which we could provide your e-mail address, either.

© 1993-2008 Fleming & Curti, P.L.C.
520-622-0400 /  FAX: 520-203-0240