## Facts

- George and Ruby Bucquet retained attorney David Livingston to plan their estate to minimize federal estate and California inheritance taxes.
- Livingston drafted an inter vivos trust funded with substantially all of George’s property.
- The trust used a marital/nonmarital split: a marital share intended to qualify for the federal marital deduction for Ruby, and a nonmarital share intended to benefit Ruby during life but pass at her death to their daughter Barbara Bucquet and her family.
- The beneficiaries alleged Livingston negligently drafted the trust by giving Ruby a general power of appointment (or tax-law equivalent) over the nonmarital share and failed to advise the settlors about the tax consequences under Internal Revenue Code § 2041.
- After George’s death, tax authorities treated Ruby as owner of the nonmarital share for transfer-tax purposes, resulting in California inheritance tax of about $50,000 on the trust’s full value (rather than a life estate), additional gift and state taxes, and attorney’s fees.
- The beneficiaries alleged these tax consequences defeated the tax-minimization plan and reduced what they would ultimately receive.
- Livingston was sued in his capacity as the settlors’ attorney and as a trustee.
- The trial court granted judgment on the pleadings against the beneficiaries on the malpractice-related causes of action, and they appealed.

## Issues

1. Whether intended beneficiaries of an inter vivos trust may sue the drafting attorney for malpractice based on negligent tax planning and failure to advise about the transfer-tax effects of a general power of appointment under Internal Revenue Code § 2041.
2. Whether the beneficiaries’ allegations of foreseeable, tax-driven diminution of their expected trust benefits sufficiently plead duty, breach, causation, and damages to survive judgment on the pleadings.

## Decision

- The Court of Appeal reversed the judgment on the pleadings.
- Taking the complaint’s allegations as true, the court held the beneficiaries stated a cause of action for legal malpractice against the drafting attorney.
- The court concluded the pleaded tax consequences (including inheritance tax on the trust’s full value and additional gift taxes and fees) supported a plausible claim that negligent drafting and advice harmed the intended beneficiaries.
- The matter was remanded for further proceedings.

## Legal Principles

- On judgment on the pleadings, the reviewing court asks only whether the complaint states a cause of action and assumes the truth of properly pleaded factual allegations.
- An attorney who undertakes estate and tax planning may owe a tort duty of care to nonclient, intended beneficiaries when the purpose of the engagement includes benefitting them and harm to their interests is a foreseeable result of negligent drafting or advice.
- A malpractice claim may be based on alleged failure to know and apply tax provisions central to the engagement—here, the transfer-tax effect of granting or retaining a general power of appointment under Internal Revenue Code § 2041—when that failure is alleged to cause identifiable tax liability and reduction of the beneficiaries’ expected interests.

## Conclusion

The court held that intended beneficiaries adequately pleaded malpractice where the drafting attorney allegedly included a general power of appointment and failed to advise of its tax consequences, resulting in additional taxes and a reduced ultimate benefit to the beneficiaries; judgment on the pleadings for the attorney was therefore reversed.


Bucquet v. Livingston, 57 Cal. App. 3d 914 (Ct. App. 1976)