It has been five years since the New York Court of Appeals released its landmark decision in Schneider v. Finmann,1 triggering concern among some trusts and estates practitioners that the wall of strict privity between client and attorney was crumbling. The Schneider court held that the personal representative of an estate could proceed with a legal malpractice claim against the decedent’s attorney for failing to properly advise the decedent of the estate tax implications resulting from the transfer of a $1 million life insurance policy from an entity of which he was the primary owner to himself. The transfer caused the proceeds of the life insurance policy to be includable in the decedent’s gross taxable estate for estate tax purposes.
Importantly, the Schneider decision did not expand the doctrine of privity to permit beneficiaries or other third parties to sue the decedent’s lawyer. The Court of Appeals noted that “relaxing privity to permit third parties to commence professional negligence actions against estate planning attorneys would produce undesirable results—uncertainty and limitless liability.”2
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