State Bar of WI: Lack of Diligence

An attorney agreed to serve as special administrator for an estate after two of the decedent’s adult children challenged the will. After settlement of the will contest, the court appointed the attorney to serve as personal representative of the estate, trustee of a testamentary trust for the benefit of two minor children of the decedent, and guardian of the two minors’ estates.

As personal representative, the attorney assumed responsibility for filing federal and state income tax returns for the estate. The federal tax return was due on April 15, 2003, but the attorney did not mail the return until April 12, 2004. The late filing caused the estate to incur penalties and interest of $10,217.43. The attorney acknowledged his responsibility for the late filing and paid the penalties and interest from his law firm account.

After filing the initial estate tax return, the attorney learned of potential tax savings that could be achieved by filing an amended federal tax return on behalf of the estate. Accordingly, the attorney prepared amended federal and state tax returns, but he once again missed the filing deadline. Although it was disputed whether the amended return and the proposed amended deductions would have been accepted by the IRS, it was apparent that the attorney miscarried his legal objective.

A key asset in the estate administered by the attorney was the decedent’s home. The decedent’s father, who was the original guardian of the person for the two minor children, had lived at the home and paid the homeowner’s insurance premiums. After the guardian resigned and moved to another state, the attorney assumed responsibility for paying these premiums. However, in 2005 the attorney misplaced the insurance premium invoice and the policy lapsed. Although the attorney immediately arranged for reinstatement of the insurance policy, and no damage claim necessitated the need for the policy, the attorney once again failed to fulfill an assumed obligation.

By failing to timely file federal estate tax returns and amended tax returns for the estate and failing to coordinate the timely payment of insurance premiums on a key estate asset, the attorney violated SCR 20:1.3, which states, “A lawyer shall act with reasonable diligence and promptness in representing a client.”

The attorney had no prior discipline.

Source:
Wisconsin Lawyer, November 2010