San Diego Estate Planning Lawyer Blog
Does a contract survive the death of one of the parties? A California appeals court recently looked into this issue and found that it did. The case, involving an attorney who performed contingency fee work in relation to another estate, serves as an important reminder that estate planning extends past your personal assets into your business. If you’re a self-employed professional it’s essential you make provisions for “winding up” your business as part of your estate plan.
In the recent Court of Appeals case-discussed here solely for informational purposes-the late Dale Sare had previously been hired by two sisters, Antonia Shad and Mary Tsouris, to deal with a number of legal matters related to the conservatorship (and later probate estate) of their half-brother, Dan Mathisen. In March 2006, Shad and Tsouris signed a contingency fee agreement with Shad, entitling him to one-third of any money that the sisters received “as conservators or beneficiaries” of Mathisen. Sare initially performed his work without signing this agreement; however, he signed a revised contingency fee contract about a month later. The revised agreement restated Sare would receive one-third of any funds the sisters recovered as conservators or beneficiaries of their brother.
Sare performed legal services related to Mathisen’s conservatorship until February 2007, when Mathisen died. At this point, Sare began to perform legal work related to Mathisen’s probate estate. The sisters sought to recover cash and various items of personal property from the estate. Eventually, the sisters received over $800,000 from Mathisen’s estate.
Court Finds Contingency Fee Enforceable After Death
By this time, however, Dale Sare had himself passed away. In May 2007, a few months after Mathisen’s death, Sare was diagnosed with multiple myeloma, a result of his prior exposure to the herbicide Agent Orange. Sare died in 2008. Prior to his death, Sare contracted another attorney, Tamara Mallery, to complete work on the Mathisen estate.
In 2009, Sare’s wife and executor, Carole Marie Sare, sued Shad and Tsouris to collect the one-third contingency owed her late husband. The sisters maintained they owed Sare nothing as his death ended their contingency fee arrangement before he formally completed work on their brother’s estate. Both the trial and appellate courts disagreed, however, and sided with Mrs. Sare.
The 2006 contingency fee agreement expressly authorized Dale Sare to “associate” himself with other attorneys in relation to the Mathisen case. At the time Sare brought in Tamara Mallery, neither sister objected. Nor did the sisters ever remove Sare as counsel of record even after his death. Furthermore, the court found Sare and Mallery “fully performed” the work required to trigger the contingency-i.e., recovery from Mathisen’s estate. Therefore the sisters owed Sare’s estate the full fee.
Planning Ahead
Succession planning is critical in any business, especially when the business is a single professional. You must consider how to provide for your clients in the event of your death or incapacity. You also need to protect your family and other heirs so they’ll be able to recover the money you earned. Contact San Diego estate planning attorney Scott C. Soady today if you have any questions.