Bradley & Riley PC

The Iowa Supreme Court issued an opinion on December 27, 2013, which confirms that financial advisors may be held liable to intended beneficiaries if the financial advisor helps the client complete an estate plan that turns out badly.  This is similar to the professional liability exposure previously extended to life insurance agents for a beneficiary designation that turns out badly.  Based on this most recent ruling, the potential for financial advisor liability appears to be impacted by how involved the financial advisor was in the consultation and preparation of the client's estate planning documents.  More involvement by the financial advisors translates into more potential for liability exposure.

In order to limit professional liability, financial advisors should always refer their clients to attorneys who are knowledgeable and skilled in formulating and drafting estate plans.  In addition, financial advisors should make it clear that while they may be facilitating the estate planning process for their client, they are not providing legal advice, nor are they serving as an agent or middle man between the client and the attorney.  Financial advisors should also encourage their client to speak directly with the attorney as much as possible.  Finally, financial advisors should not allow their clients to name them personally as the Executor, Trustee, or Attorney-in-Fact in the client's estate planning documents.

To review the recent ruling by the Iowa Supreme Court regarding liability of financial advisors, click here.

To review the prior ruling by the Iowa Supreme Court regarding liability of insurance agents, click here.

For any questions regarding this or aspects of Estate Planning, please contact Janice J. Kerkove or any member of the Estate Planning Practice Group.



Categories: Estate Planning Law

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