Opinion ID: 2045116
Heading Depth: 1
Heading Rank: 1

Heading: Finding of Attorney Neglect of Client's Legal Matters.

Text: The allegations of neglect in the handling of decedents' estates involved the estates of Frances C. See, who died in 1982, and her husband, George See, who died in 1987. A. The Frances See estate. The Frances See estate was opened in December 1982. It contained assets of approximately $300,000. Respondent was designated as attorney for the personal representative. This estate was not closed until August of 1993. At the hearing before the commission, respondent acknowledged that, after the estate had been open for approximately eighteen months (some point in 1984), all that remained to be done for closing the estate was filing the final Iowa fiduciary income tax return and obtaining the income tax acquittance from state revenue officials. He sought to justify the fact that it took nearly nine more years to close the estate on the basis of potential tort and contract claims that the decedent had concerning two policies of insurance. It appears, however, that the personal representative, acting on respondent's advice, decided to abandon one of these claims as early as 1986. As to the other claim, involving an insurance agent, rather than an insurance company, the agent had gone through a bankruptcy proceeding, and the claim in bankruptcy filed by the Sees on the disputed transaction was filed in the name of George See only. Any lingering doubt that Frances See had some claim that survived the bankruptcy was ultimately resolved by assigning all rights to such claim to the residuary beneficiary to do with as he wished. Viewing the evidence in the most favorable manner from respondent's frame of reference, we conclude that these two claims do not serve to excuse the unwarranted delay that took place in closing the Frances See estate. In the absence of some other excuse, which we fail to perceive, we find that respondent's omissions in this regard constitute neglect of a client's legal matter in violation of Iowa Code of Professional Responsibility DR 6-101(A)(3). In making this finding, we express the view that, unless a personal representative is the person or entity required by law to pursue a decedent's cause of action, such as a wrongful death claim under Iowa Code section 613.15 (1995), claims not in actual litigation need not be an impediment to the timely closing of a decedent's estate. Potential rights of recovery may be distributed as personal property to those persons who succeed thereto. As to other charges of neglect made against respondent with respect to the Frances See estate, we agree with the commission that there was no neglect on his part in failing to file timely fiduciary income tax returns for those years between the initial fiduciary return and the final fiduciary return. After the initial fiduciary income tax return for the 1983 taxable year was filed, almost all assets were distributed to the residuary beneficiary. This resulted in there being no income to report for the intervening years. The Grievance Commission concluded that, although a final fiduciary return was necessary in order to obtain the acquittance required to close the estate, no additional fiduciary income tax returns were required for the years intervening between the initial return and the final return. The issue involving the filing of fiduciary income tax returns for the intervening years is complicated by the fact that respondent did ultimately file untimely fiduciary income tax returns for those years. This was done belatedly in an attempt to take advantage of a net loss carry forward that could be distributed to the residuary beneficiary. This set of circumstances provides, we believe, an excellent example of the narrow line that exists between neglect, on the one hand, and potential malpractice, on the other. We have recognized this distinction in previous cases. See Committee on Prof'l Ethics & Conduct v. Martin, 375 N.W.2d 235, 237-38 (Iowa 1985); Committee on Prof'l Ethics & Conduct v. Rogers, 313 N.W.2d 535, 536 (Iowa 1981). We find from the evidence in the present case that respondent's failure to file fiduciary income tax returns for the intervening years was attributable to a belated appreciation of what was required to preserve the loss carry forward rather than a neglect of a client's known interests. As such, it may give rise to a claim of malpractice but was not such neglect of a client's interest that warrants the taking of disciplinary action. [1] B. The George See estate. The George See estate was opened shortly after George's death in June 1987. It consisted of assets valued at approximately $288,000. Respondent was designated as attorney for the personal representative. The Iowa inheritance tax return and any inheritance tax owing was due in the estate nine months from the end of June 1987. This would have been March 1988. Prior to that time, respondent requested and received an extension of time for filing the inheritance tax return until July 1, 1988. This deadline was never met nor was any further application for extension of time made. In October 1994, the estate was still pending and no inheritance tax return had been filed. The personal representative retained new counsel for handling the estate. These lawyers proceeded to file the delinquent inheritance tax return and fiduciary income tax returns that were required and had not been filed. Before the commission, respondent sought to justify his inaction in the George See estate on a lack of cooperation from the personal representative who was the residuary beneficiary of the estate and was a nonresident. The commission found that, although the personal representative had been uncooperative at times, the delays in taking necessary action in the estate were due to respondent's lack of persistence in seeking necessary information and general procrastination. We agree with that finding. The commission's finding that respondent violated DR 6-101(A)(3) in neglecting the administration of the George See estate was well founded.