Karam v Law Office of Kliber, ___Mich App___ (2002), #225505, 10-8-02
Return to Probate Review MenuA trust was prepared for decedent, Abraham Karam, Jr., in 1987. Included in the trust was a provision containing language creating two separate trusts, the marital trust and family trust. Upon the death of decedent, the trust provision required the trustee to use the “equalization” model to apportion the decedent’s assets between the two trusts. In 1993, decedent met with a representative of National Bank of Detroit (NBD). In a letter sent by NBD, the decedent was allegedly advised that the existing trust’s distribution scheme was a “normal” one with the first $600,000 passing into the family trust and the remainder to the marital trust, contrary to the actual language of the trust instrument. Upon receiving the letter, decedent contacted Ralph J. Kliber who after analyzing the letter and trust, drafted decedent’s will and an amendment to the trust agreement. Decedent signed these documents on December 22, 1994. The amendment did not change the nature of the controversial “equalization” language.
Decedent died in September 1997. As a result of the trust language, decedent’s assets were split almost evenly between the marital and family trusts with a resulting federal estate tax of $1,676,494 and additional Michigan inheritance taxes in the amount of $417,115. Plaintiffs who were personal representatives of decedent’s estate and beneficiaries of the trust sued the drafting attorneys and NBD for providing erroneous legal and tax advice concerning the estate plan. The trial court granted summary disposition to all defendants holding that absent an inconsistency within the trust documents themselves, the case of Mieras v DeBona, 452 Mich 278 (1996) barred plaintiffs from using extrinsic evidence to establish decedent’s intent and without reference to the extrinsic documents, plaintiffs were unable to maintain a claim for malpractice against defendants. Plaintiffs appealed such decision.
The Court of Appeals affirmed the trial court. They analyzed the case in light of two recent important cases concerning legal malpractice in drafting estate planning documents, Mieras v DeBona, 452 Mich 278 (1996) and Bullis v Downes, 240 Mich App 462 (2000). In Mieras, the Michigan Supreme Court held that beneficiaries named in a will should be afforded some right to sue the drafting attorney for malpractice. However, they went on to hold that the duty owed to named beneficiaries is narrowly circumscribed and only requires the attorney to draft a will that properly effectuates the distribution scheme set forth by testator in the will. They continued by holding that a disappointed beneficiary should not be allowed to use extrinsic evidence to prove the testator’s intent is other than set forth in the will. The reasoning behind this statement was set forth in part as follows:
There is no authority--the reasons being obvious--for the proposition that a disappointed beneficiary may prove, by evidence totally extrinsic to the will, the testator’s testamentary intent was other than as expressed in his solemn and properly executed will. [Ante at 292, quoting DeMaris v Asti, 426 So2d 1153, 1154 (Fla App, 1983).] [Mieras, supra at 303 (Boyle, J).]Top of PageIf extrinsic evidence is admitted to explain testamentary intent, as recommended by the petitioners, the risk of misinterpreting the testator’s intent increases dramatically. Furthermore, admitting extrinsic evidence heightens the tendency to manufacture false evidence that cannot be rebutted due to the unavailability of the testator. For these reasons, we adhere to the rule that standing in legal malpractice actions is limited to those who can show that the testator’s intent as expressed in the will is frustrated by the negligence of the testator’s attorney. [Id. at 304-305 (Boyle, J), quoting Espinosa v Sparber, 612 So2d 1378 (Fla, 1993) (emphasis in original).]
The Bullis case extended Mieras to other estate planning documents. Bullis, according to this Court, recognized at least a partial exception to the Mieras prohibition of extrinsic evidence applicable when the evidence is the testimony of the drafting attorney himself and it is used to either determine the decedent’s intent when that intent is not clear from the documents themselves or what the estate plan actually comprises.
The Court concluded from its reading of both Mieras and Bullis as follows:
We glean from our reading of both Mieras and Bullis that, at least in terms of an action by the beneficiaries, the beneficiaries may not introduce extrinsic evidence to show that the decedent intended an outcome different from that clearly set forth by the language of the estate documents themselves, whether couched in terms of lack of standing to sue or the inadmissibility of proposed evidence. Where the decedent’s intent is clearly expressed and the documents effectuate that intent, the beneficiaries are constrained to live with the result and the drafting attorney is not liable. However, where, as in Bullis, the estate plan documents contain internal inconsistencies, extrinsic evidence may be introduced to determine testator intent and what documents actually comprise the estate plan itself.In the present case, the Court found that the language of the trust clearly contemplated an “equalization” tax scheme. Therefore, they concluded that the beneficiary in this case had no standing to bring a malpractice claim against defendants notwithstanding that the testator’s intent expressed in the trust may not have been decedent’s true intent. The Court also concluded that personal representatives are also barred from relying on extrinsic evidence to dispute a settlor’s intent that is clearly expressed in the estate plan documents. Further because the beneficiaries, not the estate, suffered the real loss, the personal representatives would have no standing to assert a cause of action. Concerning NBD, the Court stated in a footnote:
As stated by the trial court, although plaintiffs’ claims against NBD do not sound in legal malpractice, plaintiffs fail to present any persuasive rationale for a legal distinction of Mieras. We will not allow the anomalous result of excluding extrinsic evidence of the settlor’s intent in a claim against the draftsman-lawyer and admit such evidence against the financial advisor.In conclusion, the Court found the granting of summary disposition as to all defendants proper, as beneficiaries and personal representatives, lacked standing to sue defendants because they could not show without reference to extrinsic evidence that the documents as written did not conform to decedent’s intent as clearly stated in the documents.
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