Jury Finds Blattmachr Breached Fiduciary Duty BUT Finds No Damages Resulted

The following is reproduced from the Tax Prof Blog:

The Wall Street Journal reports today [May 16, 2007] that a New York jury has found that Jonathan G. Blattmachr, one of the country’s leading estate planners and Chair of the Trusts & Estates Group at Milbank, Tweed, Hadley & McCloy (New York), breached the fiduciary duty he owed to a client, Marvin Schein, whose father founded medical-supplies company Henry Schein Inc.:

[T]he amended complaint alleged, among other things, that Blattmachr persuaded Schein to pursue a tax-avoidance strategy even though Blattmachr sensed IRS hostility toward it. The strategy, called a “split-dollar insurance arrangement,” involved the purchase of life insurance to avoid estate taxes. In December 2000, Schein paid roughly $12 million in premiums for about $340 million in life-insurance policies. The IRS effectively halted the strategy in August 2002, a move Schein said rendered his policies useless. Schein’s win was a hollow one, though. The Long Island jury ruled that the breach wasn’t a substantial factor in causing Schein injury. As a result, Schein won’t be able to recover damages.