When the End isn’t the End: Death and Taxes

by Duane Crone | September 26th, 2017 | No Comments »

Planning for the Unexpected.

How many lawyers will read a risk management piece about what needs to happen with a solo practice after the attorney’s unexpected death? I’m guessing not many, but I’m going to go ahead and write about it anyway. Don’t say I didn’t warn you.

So, what will happen? Nothing good, I’m afraid, unless you are fortunate enough to practice in a close knit legal community that has an established protocol to follow in the event of the death of one of the lawyers in private practice. The simple truth is, when nobody knows what to do, nothing gets done. Now, I realize that this mess won’t be yours to clean up, but there are some steps you can take to make things a little easier for those left behind.

The Mess You Left Behind:

Those charged with wrapping up a solo’s affairs often expect our help. Death, it turns out, is no excuse for failure to take appropriate action with regard to the clients and cases in the practice. Critical dates get missed, filings don’t get filed, contract drafting goes undone, and malpractice becomes a real concern. There is often an expectation that a professional insurer will pay policy proceeds toward post mortem “wind down” expenses. This is not the case. The obligation to have planned adequately for the possibility of death remains with the lawyer and, consequently, with her estate. Your policy might require you to be involved in risk ameliorating activities but it does not pay for them, whether you’re alive or not.

Do not expect some benevolent authority to come riding in to help your heirs. They won’t. It’s entirely in your hands.

The Most Obvious Step:

We suggest you write up a protocol of your own. Include some direction on what needs to be done and who to contact for help. Keep it with your will and consider yourself ahead of the game.

There is a plethora of general reference material to assist a legal estate administrator when closing a solo practitioner’s office. The ABA has helpful articles in its archives, as do state and local bars. These can be a good resource to make sure overall areas of concern do not get overlooked. Of course, specific advice has to come on an ad hoc basis, special to each individual practice.

First on that Contact List:

Every solo that has professional insurance has been required to provide the name of a “back-up” attorney that would be willing and able to assist clients in the event of the solo’s death or disability. The back-up attorney should be at the top of your “call in the event of” list. Each client needs to be notified promptly via an official notice. The notice should include instructions regarding the case, making it clear that the case remains the property of the client and, with the demise of the attorney, is the client’s responsibility. The office will need to offer assistance in returning files directly to clients along with help in referral to competent local replacement counsel. I’m sure it goes without saying that you should be prepared to do the same if you are acting as back-up for another attorney.

That’s Not All!

Many specific issues will remain, and getting advice can be difficult. We strongly advise estate supervisors hire competent local counsel to guide them. Professional insurers are simply unable to provide this kind of advice. There are over 50 different areas of practice and 50 different state venues to consider. For example, if files are returned to clients or passed along to other firms, should copies be retained? For how long? What statutes of limitations pertain to specific case files? Do estate probate laws stop professional liability? I raise these questions only to make the point that local counsel is a necessary estate expense for a clean closing.

The Beginning of The End:

In setting up a solo practice, contemplating a list of potentially nasty scenarios is rarely at the top of your to-do list. We recommend you think of it as part of your overall professional responsibility to your clients as well as a personal responsibility to your heirs. Life insurance could be an excellent way to cover expenses that will fall on others as they unwind your affairs in your absence. That is not self-serving, as we do not sell life insurance, but it seems like a responsible way to ensure those left behind are equipped to handle whatever comes up.


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