TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, January 23, 2013

Texas Heirs Bring Estate Planning Malpractice Action

Texas Lawyer:  Oilman's Family Sues Lawyers, Firms, Accountants:

The beneficiaries of a multimillion-dollar trust have sued an estate-planning attorney, his firm and an accounting firm, alleging professional malpractice related to a tax plan that led to litigation with the IRS.

But in an unusual twist, the beneficiaries also sued the firm and lawyers to whom their estate-planning attorney referred them for representation in that litigation before the U.S. Tax Court against the IRS. That Tax Court litigation [Hurford v. Commissioner, T.C. Memo. 2008-278] allegedly cost the plaintiffs more than $1 million in legal fees.

"As a result of the Defendants' representations, negligence and misconduct, Plaintiffs have incurred exorbitant fees and costs in the tax transactions, legal fees in pursuing litigation before the Tax Court, other expenses, and taxes, penalties and interest that otherwise would not have been owed," according to the petition in G. Michael Hurford, et al. v. Joseph B. Garza, et al.

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The Hurford 2008 opinino has a wonderful first paragraph. I recognize the first sentence's allusion, but not whether it is to Jane Austen or to a different novelist.

HOLMES, Judge: It is a truth universally acknowledged, that a recently widowed woman in possession of a good fortune must be in want of an estate planner.

Thelma Hurford had devoted her life to family and friends, leaving the management of the finances to her husband Gary. When he died suddenly, she had to learn what they owned and decide what to do with it. While she struggled with this burden, she was herself stricken with cancer and so had to arrange the accelerated planning of her own estate. Two attorneys vied for her attention and she chose Joe B. Garza.

She lost her life to the cancer. We must now decide how much of her estate will be lost to taxes.

Posted by: Eric Rasmusen | Jan 23, 2013 10:29:08 AM