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Iowa Woman Sues Insurance Agent For Error In Estate Plan

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Lois Rieger worked in the same office building as Don Jacque. Rieger was a real estate agent, and Jacque sold insurance; Rieger helped Jacque in several real estate transactions over the period of their acquaintance.

Jacque expressed his concern that Rieger had not adequately prepared her own estate plan. He suggested that she should consider establishing an irrevocable trust which, he told her, would reduce her estate taxes upon death while still permitting her to control her assets during life. Jacque also told Rieger that his insurance company, Principal Mutual Life Insurance, could prepare an estate analysis and make specific recommendations for her. When she agreed, the proposal that came back was for her to purchase $400,000 in life insurance, using an irrevocable trust to own the policy.

Rieger and Jacque then met with Iowa attorney Lawrence Stumme to review Rieger’s estate plan. Although the three of them discussed establishing an irrevocable life insurance trust, as had been recommended by Principal Mutual, Rieger made it clear that she wanted to maintain control over the assets of any trust she established. Stumme prepared a trust at her direction, but without reviewing Principal Mutual’s report or contacting anyone at the insurance company about her plan.

Seven years later, Rieger learned to her shock that the trust plan established by Stumme would not reduce the estate taxes on her death. Because she retained control over the trust assets, they would be included in her estate for tax purposes, and there had been no valid tax reason for establishing the trust. Because the trust was irrevocable, it also made it difficult for her to correct the planning error.

Rieger sued both Stumme and Jacque. Stumme apparently settled her claim before trial, but Jacque and Principal Mutual argued that they had no liability for the errors. In fact, they argued, the error had been caused by Stumme’s poor advice, and not by any report or advice prepared by the insurance company or its agent.

The Iowa Supreme Court agreed. The justices chose not to decide whether an insurance agent or an insurance company could be sued for giving bad legal advice; instead, they decided the case based on the theory of “proximate cause.” Even assuming that the advice was bad, and that Jacque and Principal Mutual owed Rieger a duty, they said, the advice she received from the insurance experts was not what led to the faulty estate plan. Rieger v. Jacque, September 23, 1998.

Rieger’s original dilemma was a common one. How can an individual’s estate be reduced for tax calculation purposes without actually requiring that he or she give up control over assets? Not surprisingly, that is a difficult result to obtain. Had Rieger followed the original advice and set up an irrevocable life insurance trust, funded with a substantial policy on her life, she would have at least created a source of funds to pay any estate tax. But she would not have been permitted to retain control over the trust’s assets.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

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Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.