Any estate planner worth his or her salt knows by now that the commonly accepted practice of representing both a husband and wife in estate planning is fraught with potential conflict-of-interest issues. The best way to get your arms around this ethics minefield is to read the Florida Bar’s Advisory Opinion 95-4, and two excellent follow up Florida Bar Journal articles entitled Joint Representation of Spouses in Estate Planning: The Saga of Advisory Opinion 95-4 and Multiple Representation in Estate Planning: Beyond Advisory Opinion 95-4, Part 2.

These are not abstract, esoteric ethics questions. If you’re not careful, they can come back to bite you in a very big way. In a story reported here, a well established Texas estate-planning attorney and his firm are reported to have been hit with a judgment for $1 million in damages for breach of fiduciary duty to “Husband,” plus $2 million in punitive damages. The Texas attorney represented a couple. His firm also represented the wife’s mom. After drafting estate planning documents providing that all assets went to the surviving spouse (thus taking full advantage of the unlimited estate tax marital deduction), wife’s mom asked lawyer to rewrite will cutting husband out and making mom the beneficiary of wife’s estate (presto! no more estate tax marital deduction). Lawyer rewrote wife’s will, wife signed new will, no one ever said anything to husband (who was also lawyer’s client), wife dies, husband sues: lawyer gets slammed.

Here are a few excerpts from the linked-to story:

“A [Comal County, Texas] jury Tuesday slapped a $3 million judgment on one of New Braunfels’ oldest and most prestigious law firms in a lawsuit claiming gross negligence and malpractice.

If the verdict and jury award stands against attorney John Dierksen and his firm, Reagan, Burrus, Dierksen, Lamon and Bluntzer, it will be the largest ever in a Comal County court.

Jurors unanimously ruled the law firm and specifically Dierksen were grossly negligent, that the negligence injured Llano businessman Robert Maxwell — a New Braunfels native — and his businesses, Maxwell Marine and Meyer-Maxwell Properties, Ltd., among others, and that the law firm failed to meet its fiduciary duty to Maxwell — costing him more than $1 million.

Along with the $1 million from failure to meet fiduciary duty, jurors set exemplary or punitive damages of $1.5 million against Dierksen and $500,000 against the law firm for a total of just over $3 million.”

Source: Wills, Trusts & Estates Prof Blog