Feb. 15, 2023 – News that Priscilla Presley would contest the distribution of her daughter Lisa Marie Presley’s estate came 13 days after Lisa Marie’s death last month.

The estate, which includes the right to Elvis Presley’s royalties and ownership of Graceland, his Tennessee mansion, is worth more than $100 million.

In 1993, Lisa Marie Presley created a revocable living trust that named her mother and her then-business manager as co-trustees. However, after Lisa Marie’s death, Priscilla learned about a trust amendment from 2016 that removed her as a co-trustee.

According to a lawsuit filed in California state court on Jan. 25, 2023, the amendment was never delivered to Priscilla Presley as required under the 1993 trust.

Additionally, the lawsuit claims, no substantive provisions appear on the amendment’s signature page and the amendment was not witnessed or notarized.

Beware Outdated Designations

“You can unwittingly override your estate plan with your beneficiary designations,” said Thomas Burton, owner of Burton Law LLC in Eau Claire.

Estate planning problems plague many, not just the rich and the famous. And they’re often caused by mistakes more mundane than the failure to deliver or witness a trust amendment.

For instance, the failure to coordinate payable-on-death (POD) beneficiary designations with will or trust provisions is a common oversight.

If a client’s will directs that the money in a decedent’s 401(k) account go to one person but the POD designation lists another person, the account holder will pay the person listed on the POD designation.

“If you have a lot of assets that are held by another institution, like a bank or an investment house or even life insurance, it’s a contract between you and that institution regarding what happens upon your death,” said Thomas Burton, owner of Burton Law LLC in Eau Claire.

“You can unwittingly override your estate plan with your beneficiary designations,” Burton said.

Failure to list a beneficiary on a POD account can also cause problems. Wisconsin’s intestate succession law will give an heir the legal right to the account, but without the beneficiary designation the heir will have to spend time and money to probate the account.

Less Is More

One way to minimize the risk of a POD designation overriding an estate plan is to de-activate accounts you’re not using.

“If you have four accounts and you only use two, maybe you don’t want to keep all four until old age,” Burton said.

Burton also recommends that lawyers advise clients to get in the habit of naming a beneficiary on the day they open an account.

“You need to fill out their form, at the bank, to fall under their rules and make transfer as smooth as possible,” Burton said.

Ch-Ch-Changes

Burton also advises his clients to revisit their beneficiary designations after major life changes.

“Marriage is a big one,” Burton said. “You want to review those. Some people start a job when they’re single and they may have designated a sibling or a parent. To leave it go until later can just make a big hassle for your loved ones.”

Under state law, estates under $50,000 that would otherwise need to be probated can be transferred by affidavit. But just because it’s legal doesn’t mean it’s preferred.

“I don’t like to rely on that,” Burton said. “Even though transfer by affidavit is a legal method, the banks often don’t like dealing with it.”

Recent Changes to TOD Law

A law enacted by the Wisconsin Legislature in 2018 added a category of property to the list that’s transferrable by a transfer-on-death (TOD) document.

According to Jacqueline Messler, a shareholder with Amundsen Davis LLC in Brookfield, prior to the 2018 law, only property that was solely owned, owned by spouses as survivorship marital property, or owned as a joint tenancy could be transferred by a TOD document.

The 2018 law allows those who own real property as tenants-in-common to use a TOD document to avoid probate.

The law also: 1) specifies that a person may designate a TOD in any document, instead of requiring a deed; and 2) requires that the TOD document and any recording fees be filed with the register of deeds in the county where the property is located before the owner dies.

Who’s the Client?

“The majority of jurisdictions and the ABA, in Formal Opinion 94-380 (1994), take the position that you represent the individual, so if you’re probating an estate the client is the personal representative, that person acting in their fiduciary capacity,” said State Bar Ethics Counsel Tim Pierce.

According to State Bar Ethics Counsel Tim Pierce, one danger area is the identity of the client in probate, which makes it important to clearly identify the client.

That’s harder in Wisconsin than it is in some states, because state law isn’t clear on who the client in a probate matter is – the personal representative or the estate.

“The majority of jurisdictions and the ABA, in Formal Opinion 94-380 (1994), take the position that you represent the individual, so if you’re probating an estate the client is the personal representative, that person acting in their fiduciary capacity,” Pierce said.

“But there’s a minority of jurisdictions that say it can be the estate, as an entity. Wisconsin has never resolved that one way or the other.”

The Wisconsin Supreme Court addressed the issue in dicta in a 2010 disciplinary opinion (Disciplinary Proceedings Against Roethe, 2010 WI 19).

“The Wisconsin Supreme Court, at least for purposes of that disciplinary case, said that the engagement agreement said that the client was the personal representative, so that’s what we’re going with,” Pierce said.

“That’s led many estate planning lawyers to extrapolate that you may be able to pick whether you want the individual or the entity to be your client. You have an affirmative obligation to be clear about that.”

Pierce said clear wording in an engagement letter is critical. He often gets calls from attorneys whose engagement letters contain wording such as “We represent the estate acting through the personal representative, and as PR we will provide you with legal services.”

“Well, what does that mean?” Pierce said.

The ambiguity regarding the client’s identity can become a big problem where an attorney discovers that an estate’s fiduciary has been dipping into the estate’s funds.

“Your obligations to the tribunal and conflicts under those circumstances can depend on whether you’re representing the individual or the entity,” Pierce said.

‘The Lawyer Can Become the Target’

“I think families are sometimes disappointed when they first find out how the estate will be transferred after someone dies, when the decision about how the estate’s going to be divided happened several years back. The attorney can’t warn the family in advance about the intended distribution because of the attorney-client privilege,” said Brian Anderson, director of claims for Wisconsin Lawyers Mutual Insurance (WILMIC).

Lawsuits sparked by estate planning mistakes often cross the desk of Brian Anderson, director of claims for Wisconsin Lawyers Mutual Insurance (WILMIC).

In 2021 and 2022, Anderson said, estate and probate claims topped both WILMIC’s most frequent and most costly claims lists.

One common factor in the estate and probate claims he sees, Anderson said, is an attorney providing an estate plan for a blended family.

For instance, natural children often become upset when they find out a parent has left a portion of his or her estate to a stepchild, especially when under a previous will or trust the natural children were to receive all the estate.

“I think families are sometimes disappointed when they first find out how the estate will be transferred after someone dies, when the decision about how the estate’s going to be divided happened several years back," Anderson said. "The attorney can’t warn the family in advance about the intended distribution because of the attorney-client privilege."

“It can be hard for a disinherited beneficiary to take when they first find out that a stepchild is going to inherit the family business instead of the natural child,” Anderson said. “They feel like they need to blame someone, and the lawyer can become the target.”

Beware Late Entries

Another factor in the claims he handles, Anderson said, is an attorney who gets involved in the estate planning process at a late stage.

“For instance, a wealthy man or woman comes to have a simple will done, and the lawyer is unaware that there’s a trust or a payable-on-death bank account that the will would be inconsistent with,” Anderson said.

“It appears that dad wanted everything to go to his daughter under the will but in reality, most of it’s not going to go to the daughter because of these other documents that the lawyer wasn’t aware of.”

Anderson said the size of the attorney’s risk in such a situation often dwarfs his or her fee.

“That’s how these claims get so big,” Anderson said. “Say someone charged $500 to draft a simple will. Well, now they’re exposed to a $2 million claim from a disinherited beneficiary who thought they would inherit the bulk of the estate.”

Nothing to Lose

The privity rules that govern a lawsuit brought by a third-party contract beneficiary don’t apply to a claim brought by a would-be beneficiary, Anderson said.

“Often a lawyer says, ‘I asked the client to bring in all documents that might be helpful for me to understand the estate, and they didn’t bring me anything,’ but the lawyer is still left holding the bag when a claim is made,” Anderson said.

If you’re not familiar with a client’s estate, Anderson said, consider pressing pause.

“Maybe it’s wise for the lawyer to just slow the process down a tad, especially if someone is on their deathbed,” Anderson said.

The exception to the privity rule means disinherited beneficiaries don’t have much to lose, especially with big law firms increasingly willing to take such cases on a contingency basis.

“They’re hard cases to defend because there’s emotion involved,” Anderson said. “You have to have an airtight file as to what you talked about, about why these decisions were made and was the client competent and not acting under undue influence?”

Documentation is Key

In addition to an engagement letter, Anderson recommends that attorneys send clients a termination letter stating what the attorney was engaged to do and what he or she did and didn’t do.

He also said it’s a good idea to memorialize when the client didn’t follow advice, for instance by failing to consult with a tax expert.

“If you don’t feel that you have the time to handle a complicated estate matter, it may be best to say ‘No,’ because under the law, the last attorney who had a chance to correct the situation is on the hook for legal malpractice,” Anderson said.

Check Your Policy Limits

That reality means that estate planning attorneys should also ensure they’re carrying enough malpractice insurance.

“You don’t want to be handling a million-dollar estate with $100,000 in coverage,” Anderson said. “When there’s money at stake and there are bad family dynamics, unfortunately the lawyer is the one they look to for damages.”