A grandmother hires a lawyer to plan her estate. She wants her children to get specific gifts, and she wants what is left to go to her grandchildren through a trust. She signs the papers, dies a few months later, and the family learns the trust doesn’t work. The money that was supposed to go to the grandchildren goes to her children instead.
Can the grandchildren sue the lawyer? In most states, the answer is at least sometimes yes. In Texas, the answer is no. A lawyer who drafts a will or trust owes a professional duty only to the client who hired him, not to the people the client wanted to benefit. Lawyers call this the privity rule.
The Texas Supreme Court settled the point in Barcelo v. Elliott, No. 95-0341, 923 S.W.2d 575 (Tex. May 10, 1996). The court had to decide whether Texas should join most other states and let the intended beneficiaries of a failed will or trust sue the lawyer who drafted it.
What Happened to Frances Barcelo’s Trust?
Frances Barcelo hired attorney David Elliott, of the firm Eikenburg & Stiles, P.C., to handle her estate planning. Elliott prepared a will and a living (inter vivos) trust agreement. The will left specific gifts to her children and left the rest of her estate to the trust. Under the trust, Frances would receive the income while she was alive. When she died, the trust would end, specific amounts would go to her children and siblings, and the remainder would go to her six grandchildren.
The trust was supposed to be funded with cash and shares of stock during her lifetime. The grandchildren say that never happened. Frances signed the will and trust in September 1990 and died on January 22, 1991.
Two of her children then challenged the trust. The probate court declared it invalid and unenforceable. The record doesn’t say why. With the trust gone, the grandchildren settled for what they say was a much smaller share of the estate than the trust would have given them.
The grandchildren then sued Elliott and his firm for legal malpractice. They claimed Elliott made three mistakes:
- He wrote the trust so that it would not take effect until the trustee, First City Bank of Houston, signed it, and then never got the bank’s signature.
- He wrote the trust to end at Frances’s death. According to the grandchildren, that left her residuary estate to pass by intestacy to her children instead of to them.
- He never took the steps needed to fund the trust with her stock.
Elliott didn’t argue that he did the work correctly. He moved for summary judgment on a single ground: he never represented the grandchildren, so he owed them no duty. The trial court agreed, and the court of appeals affirmed. So the only question before the Supreme Court was whether the grandchildren could sue at all.
Who Can Sue an Estate Planning Lawyer?
To answer that, we first have to look at what a malpractice claim requires. In Texas, legal malpractice is a negligence claim. The first element of any negligence claim is duty. If the lawyer owed you no duty, it doesn’t matter how badly he did the job.
At common law, a lawyer owes a duty of care only to his client, not to third parties who may be hurt by his work. The court called this the “privity barrier.” The idea is that without it, clients would lose control of their own lawyer, and lawyers would face almost unlimited liability. Before Barcelo, Texas courts of appeals had uniformly applied that barrier to estate planning.
Most other states had gone the other way. The court listed California, Connecticut, the District of Columbia, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Oregon, Pennsylvania, and Wisconsin as states that had relaxed the rule for estate planning. They fall into two groups. Some let anyone who claims to be an intended beneficiary sue. Others limit claims to beneficiaries named in the failed will or trust itself. Iowa, for example, allows a claim only when the lawyer’s negligence frustrates the testator’s intent “as expressed in the testamentary instruments” and the beneficiary’s interest is “either lost, diminished, or unrealized.”
The grandchildren argued that recognizing a limited exception for specific, intended beneficiaries of an estate plan wouldn’t undercut the reasons for the privity rule. They were named in the trust. Their interests and their grandmother’s lined up.
Why Did the Court Keep the Privity Rule?
The court rejected both versions. The broad version was the easy call. Letting disappointed heirs use outside evidence to prove the testator really wanted something different from what the will says would invite suits from anyone who felt shortchanged. It would also split the lawyer’s loyalty between the client and the people hoping to inherit.
The narrower version was harder, but the court rejected it too. When a will or trust fails, there are usually real questions about what the client actually wanted. The court gave an example: a properly drafted will that was never signed before the testator died. Maybe the lawyer dragged his feet. Or maybe the testator was having second thoughts about who gets what. If a lawyer knows that an unsigned will could expose him to a malpractice suit, that pressure could affect how he advises a client who is still making up her mind.
The court said Barcelo itself showed the problem. The grandchildren blamed Elliott for not funding the trust and not getting the trustee’s signature. But those gaps “could have existed pursuant to Barcelo’s instructions, which may have been based on advice from her attorneys attempting to represent her best interests.” A lawyer’s ability to give that kind of advice, the court said, “would be severely compromised if the advice could be second-guessed by persons named as beneficiaries under the unconsummated trust.”
Because the court couldn’t find a clean way to separate real drafting errors from a client’s own choices, it chose a bright line: “We believe the greater good is served by preserving a bright-line privity rule which denies a cause of action to all beneficiaries whom the attorney did not represent.” The holding: “an attorney retained by a testator or settlor to draft a will or trust owes no professional duty of care to persons named as beneficiaries under the will or trust.”
The grandchildren also tried a contract theory, arguing they were third-party beneficiaries of Frances’s agreement with her lawyer. That failed too. In Texas, legal malpractice sounds in tort, not contract. Relabeling the claim doesn’t change the answer to the duty question.
Three justices dissented. Justice Cornyn, joined by Justice Abbott, would have let any intended beneficiary sue. He pointed out that the harm to the grandchildren was plainly foreseeable, since they were the reason Frances hired a lawyer, and that the Court was adopting a rule “recognized in only four states.” He also argued that the attorney-client privilege does not survive the testator in Texas, so letting beneficiaries sue wouldn’t expose client confidences. Justice Spector took a middle path. She would have allowed claims only by beneficiaries specifically identified on the face of the failed will or trust. She noted that the estate itself may suffer no loss when a plan fails, so under the majority’s rule a lawyer who drafts a will or trust that turns out to be invalid after the client’s death “is accountable to no one.”
The Takeaway
Barcelo is still the law in Texas. If you are a beneficiary and a will or trust fails because of the lawyer’s mistake, you cannot sue that lawyer for malpractice, even if your name is right there in the document.
That doesn’t always leave the family without a remedy. Ten years later, in Belt v. Oppenheimer, Blend, Harrison & Tate, Inc., 192 S.W.3d 780 (Tex. 2006), the Texas Supreme Court held that the estate’s personal representative can bring a malpractice claim on behalf of the estate against the decedent’s estate planning lawyers. But that claim belongs to the estate, and it only helps if the estate itself lost something. That is the gap Justice Spector pointed to, because a failed gift to a grandchild may cost the estate nothing.
The practical lesson is to make sure the plan works while the client is alive to fix it. If a trust needs a trustee’s signature, get it. If it needs to be funded, transfer the assets. If the will leaves everything to a trust, make sure the trust will still exist when the will takes effect. After death, the people who lose out are usually the ones Texas law won’t let sue.
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Disclaimer
The content of this website is for informational purposes only and should not be construed as legal advice. The information presented may not apply to your situation and should not be acted upon without consulting a qualified probate attorney. We encourage you to seek the advice of a competent attorney with any legal questions you may have.
