Probate lawyer never told me I had to file taxes for dead person

November 10, 2016 8:46 PM

I am the administrator for my stepfather-in-law's estate, which is in probate. I hires a lawyer and he never told me that I had to file tax returns for a dead person, and now the IRS and the state is coming after the estate for about $10,000 in penalties for failure-to-file (the estate earns income from a partnership).

This was very confusing, as I believe customary duty of a probate lawyer is advise and assist with addressing income tax issues. At no time did he tell me that estate taxes must be filed. I didn't know that estate taxes even had to be filed. Fortunately I mentioned to my personal income tax preparer that my stepfather-in-law had a probate account and he told me that I was required to file tax paperwork for his estate. He did the taxes but they were very late.

I feel he should cover these penalties for not telling me what to do. My question is, am I right or wrong? If right, what's the best way to make a complaint?

posted by ottomatik to Law & Government (3 answers total)

Well, you could tell the lawyer about the problem and see what he does. You could also retain an attorney to pursue a legal malpractice claim against the probate lawyer. The problem is that $10,000 is a pretty small amount of damages in the grand scheme of things (not that I would want to be out that amount) and some lawyers would be hesitant to take on a contingent fee case at that level. But it's worth a shot, perhaps.
posted by bepe at 9:11 PM on November 10, 2016

Ask your income tax preparer to assist you with filing an appeal to the IRS to waive the penalties. You might not get the penalties waived since it is the taxpayer's responsibility to be aware of any filing requirements, but it is worth a shot. As the executor, your duties include filing tax returns for the estate, even if there is no tax due, so they might not accept "lack of information from the probate lawyer" as a reason for waiving late filing penalties.

I went through something similar with my dad's estate (though it was about back taxes from when he was alive) and our initial appeals were denied, even though we had proof that my dad's accountant was wildly incompetent in his advice.
posted by bedhead at 8:47 AM on November 11, 2016 [1 favorite]

Getting the "waiver denied" note from the IRS will help with filing a suit for malpractice, if you decide to go that route - it'll prove that you were harmed by his failure to mention what should've been a basic part of his job. So definitely apply for the waiver, no matter how unlikely it is to be granted.

And find out what the small claims court limits are in your state; they're almost certainly not $10k, but they might be substantial enough to make that route, without a lawyer, worth trying. (CA's limit on small claims is $7,500.)
posted by ErisLordFreedom at 9:10 AM on November 11, 2016