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ACTEC COMMENTARIES ON THE MODEL RULES OF PROFESSIONAL CONDUCT

(a)     A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless:

(1)    the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client;

(2)    the client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel on the transaction; and

(3)    the client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.

(b)     A lawyer shall not use information relating to representation of a client to the disadvantage of the client unless the client gives informed consent, except as permitted or required by these Rules.

(c)     A lawyer shall not solicit any substantial gift from a client, including a testamentary gift, or prepare on behalf of a client an instrument giving the lawyer or a person related to the lawyer any substantial gift unless the lawyer or other recipient of the gift is related to the client. For purposes of this paragraph, related persons include a spouse, child, grandchild, parent, grandparent or other relative or individual with whom the lawyer or the client maintains a close, familial relationship.

(d)     Prior to the conclusion of representation of a client, a lawyer shall not make or negotiate an agreement giving the lawyer literary or media rights to a portrayal or account based in substantial part on information relating to the representation.

(e)     A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that:

(1)    a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter; and

(2)    a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client.

(f)     A lawyer shall not accept compensation for representing a client from one other than the client unless:

(1)    the client gives informed consent;

(2)    there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship; and

(3)    information relating to representation of a client is protected as required by Rule 1.6.

(g)     A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients, or in a criminal case an aggregate agreement as to guilty or nolo contendere pleas, unless each client gives informed consent, in a writing signed by the client. The lawyer’s disclosure shall include the existence and nature of all the claims or pleas involved and of the participation of each person in the settlement.

(h)     A lawyer shall not:

(1)    make an agreement prospectively limiting the lawyer's liability to a client for malpractice unless the client is independently represented in making the agreement; or

(2)    settle a claim or potential claim for such liability with an unrepresented client or former client unless that person is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel in connection therewith.

(i)     A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client, except that the lawyer may:

(1)    acquire a lien authorized by law to secure the lawyer's fee or expenses; and

(2)    contract with a client for a reasonable contingent fee in a civil case.

(j)     A lawyer shall not have sexual relations with a client unless a consensual sexual relationship existed between them when the client-lawyer relationship commenced.

(k)     While lawyers are associated in a firm, a prohibition in the foregoing paragraphs (a) through (i) that applies to any one of them shall apply to all of them.

* * * * * * * * * * * * * * *
Business Transactions with Client. MRPC 1.8(a) provides mandatory procedural safeguards when a lawyer engages in business transactions with a client. As explained in this Commentary, lawyers often provide services for clients that could be considered business transactions but should not be so considered. Like any lawyer, an estate lawyer who desires to enter a business transaction with a client should follow the procedures set forth in MRPC 1.8(a).
As to lawyers who seek or receive a commission or referral fee from a third party when providing legal services to a client, see Commentary to MRPC 1.5 (No Rebates, Discounts, Commissions or Referral Fees).
Prohibited Transactions. Unless the lawyer complies with the requirements of MRPC 1.8(a), a lawyer generally should not enter into purchase or sale transactions with a client or with the beneficiaries of a fiduciary estate if the lawyer is serving as fiduciary or as counsel to the fiduciary.
Gifts to Lawyer. MRPC 1.8 generally prohibits a lawyer from soliciting a substantial gift from a client, including a testamentary gift, or preparing for a client an instrument that gives the lawyer or a person related to the lawyer a substantial gift. A lawyer may properly prepare a will or other document that includes a substantial benefit for the lawyer or a person related to the lawyer if the lawyer or other recipient is related to the client. The term “related person” is defined in MRPC 1.8(c) and may include a person who is not related by blood or marriage but has a close familial relationship. However, the lawyer should exercise special care if the proposed gift to the lawyer or a related person is disproportionately large in relation to the gift the client proposes to make to others who are equally related. Neither the lawyer nor a person associated with the lawyer can assist an unrelated client in making a substantial gift to the lawyer or to a person related to the lawyer. See MRPC 1.8(k).
For the purposes of this Commentary, the substantiality of a gift is determined by reference both to the size of the client's estate and to the size of the estate of the designated recipient. The provisions of this rule extend to all methods by which gratuitous transfers might be made by a client including life insurance, joint tenancy with right of survivorship, and pay-on-death and trust accounts. As noted in ABA Formal Opinion 02-426, the client’s appointment of the lawyer as a fiduciary is not a gift to the lawyer and is not a business transaction that would subject the appointment to MRPC 1.8. Nevertheless, such an appointment is subject to the general conflict of interest provisions of MRPC 1.7.
Exculpatory Clauses. Under some circumstances and at the client's request, a lawyer may properly include an exculpatory provision in a document drafted by the lawyer for the client that appoints the lawyer to a fiduciary office. (An exculpatory provision is one that exonerates a fiduciary from liability for certain acts and omissions affecting the fiduciary estate.) The lawyer ordinarily should not include an exculpatory clause without the informed consent of an unrelated client. An exculpatory clause is often desired by a client who wishes to appoint an individual nonprofessional or family member as fiduciary.
Payment of Compensation by Person Other than Client. It is relatively common for a person other than the client to pay for the client’s estate planning services. Examples include payment by a parent or other relative or by an employer. A lawyer asked to provide legal services on such terms may do so provided the requirements of MRPCs 1.5, 1.7, and 1.8(f) are satisfied.
Example 1.8-1. Father (F), a client of Lawyer (L), has asked L to prepare an irrevocable trust for F's daughter (D), who will soon attain her majority. F wants D to transfer property to the trust that D will be entitled to receive from a custodianship that was established for D under the Uniform Transfers to Minors Act. F has indicated that he would pay the cost of L's services in connection with the preparation of the trust. Before undertaking to represent D, L should inform F regarding the requirements of MRPC 1.8-- particularly that L must be free to exercise independent judgment in advising D in the matter. L must also obtain D's informed consent to L being compensated by F. Since F is a client, L must be satisfied that representing both F and D is permissible. If there is significant risk that the L’s representation of D will be materially limited by the lawyer’s own interests in the fee arrangement or by L’s responsibilities to F, then the consent must be confirmed in writing. See ACTEC Commentary on MRPC 1.7. If L cannot represent both F and D consistent with the provisions of MRPC 1.7, L should decline to represent D. L should not prepare the trust at F's request without meeting with D personally--just as L should not draw D's will without meeting with her personally.
Example 1.8-2. After a review of various forms of fringe benefit programs, Employer (E) is introduced to Lawyer (L) for the purpose of having L provide estate planning services for those of E's employees who desire such services. E agrees to pay L for providing the contemplated professional services “that will benefit E's employees.” Provided each employee gives an informed consent to L's representation of the employee under the circumstances, and provided L exercises independent judgment on behalf of each employee-client, L may render the services requested by each employee.
Retention of Original Documents. A lawyer who has drawn a will or other estate planning documents for a client may offer to retain the executed originals of the documents subject to the client's instructions. However, a lawyer who retains a client's documents for safekeeping should provide the client with a written receipt, which may be in the form of a letter, acknowledging that the documents are held subject to the client's order. The receipt may, but need not, also indicate that the fiduciary designated in the documents is not required to retain as counsel the lawyer with whom the documents were left for safekeeping. The documents should be held by the lawyer in a manner consistent with the requirements of MRPC 1.15 (Safekeeping Property) regarding the duties of a lawyer who receives and holds property on behalf of a client. In particular, the documents should be properly identified and appropriately safeguarded. Subject to otherwise applicable law, the lawyer should comply with the client's written directions regarding disposition of the documents.
The retention of the client's original estate planning documents does not itself make the client an “active” client or impose any obligation on the lawyer to take steps to remain informed regarding the client's management of property and family status. Similarly, sending a client periodic letters encouraging the client to review the sufficiency of the client's estate plan or calling the client's attention to subsequent legal developments does not increase the lawyer's obligations to the client. See ACTEC Commentary on MRPC 1.4 (Communication) for a discussion of the concept of dormant representation.
ANNOTATIONS
See Caveat to Annotations
(Limiting the Scope and Purpose of the Annotations)
Gifts to Lawyer
Statutes
California:
California has enacted detailed legislation voiding any gift to a “disqualified person,” a term defined to include any individual having a fiduciary relationship to the transferor who drafts, transcribes or causes to be drafted or transcribed any instrument of transfer (i.e., will, trust, deed, etc.), relatives by blood or marriage of or cohabitants with such persons, and partners, shareholders and partnerships or corporations in which disqualified persons have a ten percent or more interest, and employees of any such entity. Exceptions to disqualification include: (i) if the otherwise disqualified person is related by blood or marriage to or a cohabitant with the transferor; (ii) if an independent attorney certifies that the transfer was not the product of fraud, menace, duress or undue influence. Cal. Prob.C. §§21350-21356.
Texas:
Texas Probate Code §58b (adopted in 1997) provides in subsection (a): “A devise or bequest of property in a will to an attorney who prepares or supervises the preparation of the will or a devise or bequest of property in a will to an heir or employee of the attorney who prepares or supervises the preparation of the will is void.” Subsection (b) exempts “a bequest made to a person who is related within the third degree by consanguinity or affinity to the testator....”
Cases
California:
Estate of Auen, 35 Cal. Rptr. 2d 557 (Ct. App. 1994). This case is discussed in the Annotations following the ACTEC Commentary on MRPC 1.7.
Estate of Rohde, 323 P.2d 490 (Ct. App. 1958). This case is discussed in the Annotations following the ACTEC Commentary on MRPC 1.7.
Colorado:
People v. Berge, 620 P.2d 23 (Colo. 1980). A lawyer who was left a substantial bequest under a will prepared by a lawyer who shared office space with the lawyer-beneficiary was suspended for 90 days. The will required the executor to engage a member of the lawyer-beneficiary’s firm as a condition of appointment. The lawyer-beneficiary also acted as witness to will that benefited him.
Iowa:
Committee on Professional Ethics v. Behnke, 276 N.W.2d 838 (Iowa 1979). A lawyer was suspended for three years for drawing a will under which he was a major beneficiary. The court held that EC 5- 5 was not merely aspirational.
Committee on Professional Ethics v. Randall, 285 N.W.2d 161 (Iowa 1979), cert. denied, 446 U.S. 946 (1980). A lawyer was disbarred for preparing a will for a long-time client that left the client’s entire multi-million dollar estate to the scrivener.
Louisiana:
In re Hoffman, 883 So. 2d 425 (La. 2004). This case is discussed in the Annotations following the ACTEC Commentary on MRPC 1.7.
Michigan:
In re Karabatian’s Estate, 170 N.W.2d 166 (Mich. Ct. App. 1969). A bequest to a lawyer who drew the will of an unrelated client was held to be void. Accordingly, the lawyer lacked standing to contest a later will.
New Hampshire:
Whelan’s Case, 619 A.2d 571 (N.H. 1992). In this case a lawyer was censured for drafting a will in which the testatrix left her residence to the scrivener’s partner. The lawyer did not violate MRPC 1.8(c) or MRPC 1.10. Instead, the lawyer violated MRPC 5.1(c)(2) because the lawyer is responsible for the lawyer’s partner’s violation of MRPC 1.8(c) and MRPC 8.4(a). In its opinion the court observed that: “The respondent’s defense is basically one of ignorance of the Rules of Professional Conduct, which is no defense. We hold that lawyers, upon admission to the bar, are deemed to know the Rules of Professional Conduct.” 619 A.2d at 573.
New York:
Will of Cromwell, Dec’d, 552 N.Y.S. 2d 480 (Surr. Ct. 1989). The gift of $500,000 to an attorney draftsman was held valid where it was not procured by fraud or undue influence and where there was a longstanding professional relationship between the attorney and the testator involving close family ties.
Will of Elsa Tank, Dec’d, 503 N.Y.S. 2d 495 (Surr. Ct. 1986). Lawyer preparing the will of a woman in failing health who insisted that the lawyer include a bequest to himself had the ethical duty to discourage and refuse the bequest, particularly when the relationship between the attorney and the client was not founded upon any friendship. The court cites Code of Professional Responsibility EC 1-1 et seq., and EC 5-5, which states that a lawyer “should not suggest to his client that a gift be made to himself or for his benefit. If a lawyer accepts a gift from his client, he is peculiarly susceptible to the charge that he unduly influenced or overreached the client. Other than in exceptional circumstances, a lawyer should insist that an instrument in which his client desires to name him beneficially be prepared by another lawyer selected by the client.”
North Dakota:
In re Disciplinary Action Against Boulger, 637 N.W.2d 710 (N.D. 2001). Attorney drafted will for client/friend that gave attorney a 20% contingent devise of a large estate. The terms of the contingency were that the testator’s sons would have to predecease the testator, without issue. The contingency never materialized, and the attorney received no property from the estate. Nevertheless, the attorney was reprimanded. MRPC 1.8 prohibits an attorney from drafting an instrument giving herself a substantial gift. The extreme unlikelihood of the occurrence of the contingencies is immaterial. Simply because a gift is contingent, it is not rendered “insubstantial.”
Ohio:
Clermont County Bar Association v. Bradford, 685 N.E.2d 515 (Ohio 1997). In this attorney disciplinary proceeding the Supreme Court of Ohio held that an attorney’s misconduct in representing the husband’s heirs after doing preliminary work for the wife’s heirs and in drafting revisions to a will under which he was a contingent remainderman warranted public reprimand.
Mahoning County Bar Ass’n v. Theofilos, 521 N.E.2d 797 (Ohio 1988). A lawyer was suspended for one year for drawing a will for a client he had known for only four months that gave the client’s entire estate to the scrivener and his minor son. All of the decedent’s assets passed to the lawyer under joint and survivor bank accounts.
Pennsylvania:
In re Bloch, 625 A.2d 57 (Pa. Super. Ct. 1993). A will that named the scrivener’s father and his paramour as residuary legatees was not proved to be the result of undue influence. The court observed: To the extent that the scrivener’s conduct is challenged as unethical behavior violative of the Rules of Professional Conduct, MRPC 1.8(c), our Supreme Court has held that enforcement of the Rules of Professional Conduct does not extend itself to allow courts to alter substantive law or to punish an attorney’s misconduct.... We have been presented with no evidence of undue influence engaged in by the scrivener as to the decedent, nor was there proof of a weakened intellect associated with the testatrix during the period the will in question was prepared.... Accordingly, we are not prepared to invalidate the will on the grounds that the scrivener acted in violation of the Code of Professional Conduct. 625 A.2d at 62-63.
South Dakota:
In re Discipline of Martin, 505 N.W.2d 101 (S.D. 1993). In this case a lawyer was suspended for two years for multiple infractions, including preparation of a will that named the lawyer as executor and trustee, which would allow the lawyer to manage the estate, including his debts to the estate. The lawyer never advised his aged client to obtain independent advice.
In re Discipline of Mattson, 651 N.W.2d. 278 (S.D. 2002). Elderly uncle appointed his attorney/nephew to be his attorney-in-fact. After execution of the power of attorney, the attorney and his wife received over $325,000, resulting from transfers or beneficiary designations authorized by attorney. Attorney advised uncle to reduce inheritance taxes by gift-giving, without advising uncle to obtain advice from independent counsel. Attorney was found to have violated MRPC 1.8, even though attorney did not prepare a particular instrument by which he received the testamentary gift. Attorney placed his personal monetary gain over uncle’s best interests.
Tennessee:
Matlock v. Simpson, 902 S.W. 2d 384 (Tenn. 1995). This will contest action involved a will drawn by a lawyer that left the lawyer almost all of the unrelated client’s estate. The earlier wills that the lawyer had drawn for the client left the client’s estate to his son or to his son and his daughter. The client also had executed a general power of attorney that named the lawyer as his attorney-in-fact, “with full authority to handle his business affairs and assets as fully” as the client could. The court reviewed the presumptions that apply to transactions between persons in a confidential relationship. The court held that, as a matter of law, a confidential relationship existed, and the validity of a subsequent transaction that benefits the dominant party is rebuttably presumed to be the product of undue influence. The court continued that the presumption of undue influence arising out of a confidential relationship can only be overcome by clear and convincing evidence.
Wisconsin:
State v. Collentine, 159 N.W.2d 50 (Wis. 1968). The Supreme Court of Wisconsin held that an attorney who, as conservator of an estate, prepared a will bequeathing the residue of the conservatee’s estate to himself, was guilty of unprofessional conduct. However, the court held that he was subject only to being admonished rather than disciplined where the evidence showed the attorney had attempted to persuade the testator to get another attorney to draft the will and had taken pains to establish that it was the testator’s independent and uninfluenced volition to have such a will prepared (and where there was no natural recipient of the testator’s bounty and the residuary estate was of no value).
Ethics Opinion
Connecticut:
Eth. Op. 97-1 (1997). A lawyer is in violation of MRPC 1.8 if a lawyer prepares a will under which he or she is named as a beneficiary even at the express request of the testator, regardless of the fact that the testator is referred to another attorney in the same law office as the lawyer who prepared the will for the purpose of execution of the will.
Transactions with Client or Beneficiary
Cases
California:
Sodikoff v. State Bar, 121 Cal. Rptr. 467 (1975). In this disciplinary action the court imposed a six month suspension on a lawyer who represented the administrator of an estate who violated a position of trust and confidence that he voluntarily assumed vis-a-vis an elderly beneficiary, who lived in England. The lawyer, who had encouraged the beneficiary to sell real property, falsely advised the beneficiary that “one of our clients by the name of Acquistate, a California corporation” had made an offer to buy the property for $20,000. The lawyer failed to disclose to the beneficiary that Acquistate was not a client of the law firm but was the lawyer’s alter ego. The lawyer also failed to disclose that the property had been appraised at $46,500.
Massachusetts:
In the Matter of Wayne H. Eisenhauer, 689 N.E.2d 783 (Mass. 1998). Lawyer was retained to draft revocable trust which named lawyer as trustee and contained a provision giving lawyer veto power over the naming of any successor trustee. These provisions were “highly unusual” and “solely for the benefit” of the lawyer. There was no evidence that lawyer had disclosed the conflict of interest to the client-settlor or that the client had affirmatively consented to it.
Minnesota:
In re Trust Created by Boss, 487 N.W.2d 256 (Minn. Ct. App. 1992). Attorney trustee failed to overcome the presumption of fraud that arose from his drafting a trust amendment in which he had a beneficial interest. Further, the attorney’s failure to recommend that the client seek outside counsel regarding the amendment violated MRPC 1.8(c) and was unethical. Also, the attorney failed to advise the client that the trust did not need to be irrevocable. The trial court was within its discretion to declare the amendment void, validate the revocation of the trust, and order the attorney trustee to reimburse excessive fees.
New York:
In re Bond and Mortgage Guarantee Co., 103 N.E.2d 721 (N.Y. 1952). The lawyer for a trustee for the holders of mortgage certificates may not purchase certificates under any circumstance.
North Dakota:
In re Disciplinary Action Against Giese, 662 N.W.2d 250 (N.D. 2003). Attorney entered into contract to purchase land from clients (husband and wife), whom he was representing in a separate matter involving a dispute over the land. He notified clients in writing that he was unable to represent them in the sale of the land, and advised them to seek independent counsel. After husband died, attorney asked wife to execute a warranty deed to attorney, without advising wife to seek independent counsel. Because of the nature of the attorney-client relationship, including the attorney’s superior knowledge in business transactions, the mere suggestion that the client should seek independent counsel’s review of the transaction is insufficient to satisfy the attorney’s obligation imposed by MRPC 1.8.
Oregon:
In re Stauffer, 956 P.2d 967 (Or. 1998). This case is discussed in the Annotations following the ACTEC Commentary on MRPC 1.5.
In re Hendricks, 580 P.2d 188 (Or. 1978). A lawyer was disciplined for borrowing from a client without properly documenting the loan or advising the client to obtain independent counsel.
Ethics Opinions
Delaware:
Del. Op. 80-6 (1980). This opinion allows the lawyer to purchase an asset from a beneficiary with full disclosure at a fair price. The opinion is summarized in more detail in the Annotations following the ACTEC Commentary on MRPC 1.7.
Indiana:
Op. 1-2002 (2002). This opinion discusses three related issues faced by an attorney becoming a financial planner. In that capacity he may solicit by telephone, a practice forbidden to attorneys by MRPC 7.3. He may not, however, refer financial planning clients to another attorney for estate planning because the client was procured by telephone solicitation. The attorney may sell financial products to his law clients if he follows the narrow path left open for attorney, client transactions described in MRPC 1.8 including that the arrangement is objectively fair to the client, that the client be advised to seek counsel, and that the client consent to the arrangement in writing. It is also required that the attorney show that the non-lawyer activities can be distinguished from the law practice.
Missouri:
Informal Advisory Op. 20020024 (2002). It is allowable for an attorney to have a financial planning/ insurance practice, independent of the attorney’s law practice. The attorney does not violate any ethics rules if he refers his legal clients to his financial planning/insurance practice so long as he advises the clients in writing of: (1) the differences in confidentiality, (2) the fact that he will receive compensation if they purchase the products from the attorney’s financial planning practice, and (3) that they have the right to consult with independent legal counsel regarding the advisability of purchasing these products. The attorney is allowed to let clients of the financial planning/insurance practice know that he is an attorney and his affiliation with his firm. Also, the attorney must notify the clients that they have the right to purchase the products from a different financial planning/ insurance business. However, it would be a violation of “in-person solicitation” provisions under the model rules for the attorney, or any employee of his financial planning/insurance business, to refer a client of that business to the attorney’s legal practice.
Informal Advisory Op. 950115 (1995). If a life insurance agent advertises for an estate planning seminar at which the agent makes a presentation on life insurance and an attorney makes a presentation on estate planning, then the attorney is under a duty to make sure that the agent’s advertising for the seminar was not false, misleading, or deceptive in any manner. If the attorney would like to hire the agent to assist clients in funding a living trust, then the attorney would have to make sure that clients were fully informed of the relationship between the agent and the attorney and that they consent to such a relationship. In this business endeavor, the agent’s duties must be relegated to non-legal responsibilities and he is prohibited from engaging in any activity that would be in violation of the MRPC.
New York:
N.Y. Op. 711 (1999). A lawyer may not sell long-term care insurance to the lawyer’s own clients if the representation relates to estate planning or other matters or areas of practice that might reasonably cause the lawyer’s professional judgment on behalf of the client to be affected by the lawyer’s own financial or business interest.
N.Y. Op. 619 (1991). Because of the conflict of interest involved, it is impermissible for a lawyer engaged in estate planning to offer life insurance products to clients who come to the lawyer for counseling in estate and trust matters, if the lawyer has a financial interest in the particular products recommended. Because of the wide array of insurance products that are available at differing costs, etc., there could not be “meaningful consent by the client to the lawyer having a separate business interest of this kind.”
Ohio:
Op. 2001-4 (2001). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 1.7.
Pennsylvania:
Op. 2003-16 (2003). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 1.5.
Op. 2000-100 (2000). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 1.5.
Rhode Island:
Op. No. 99-16 (1999). Lawyer may purchase asset from client/guardian if (i) written disclosure of transaction is provided to guardian; (ii) guardian is advised to seek independent counsel; and (iii) guardian consents in writing to terms of transaction.
Op. No. 99-08 (1999). Lawyer may not provide both legal services and investment services to same client. Inherent conflict makes it impossible to satisfy requirements of fairness and reasonableness to client.
Utah:
Op. No. 01-04 (2001). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 1.5.
Op. No. 99-07 (1999). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 1.5.
Op. No. 146A (1995). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 1.5.
Virginia:
Op. 1754 (2001). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 1.5.
Appointment of Scrivener as Attorney for Fiduciary
Ethics Opinions
Mississippi:
Miss. Op. 73 (1990). A lawyer may at client’s request draft a will naming scrivener as attorney for the estate.
Montana:
Eth. Op. 960731 (1996). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 1.7.
Retaining Original Documents
Ethics Opinions
Pennsylvania:
Op. 2001-300 (2000). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 1.7.
Op. 97-66 (1997). A lawyer had prepared a will for a woman who died. Her husband was named executor but had refused to probate the will for nine months after his wife’s death. The will was in the possession of the lawyer. This opinion holds that the attorney has an absolute obligation to take steps to see that the will is given effect.
Serving as Fiduciary and Counsel for Fiduciary
Statute
California:
California by statute prohibits lawyers who are serving as fiduciaries from collecting dual compensation unless such dual compensation is specifically authorized by the court in the conservatorship, guardianship or estate context or, in the case of inter vivos trusts, following advance notice to the beneficiaries and no objection by the beneficiaries. A purported waiver of these provisions in any instrument of transfer is void as against public policy. Cal. Prob. C. §§10804, 15687.
Cases
Massachusetts:
In the Matter of Wayne H. Eisenhauer, 689 N.E.2d 783 (Mass. 1998). Lawyer was retained to draft revocable trust which named lawyer as trustee and contained a provision giving lawyer veto power over the naming of any successor trustee. These provisions were “highly unusual” and “solely for the benefit” of the lawyer. There was no evidence that lawyer had disclosed the conflict of interest to the client-settlor or that the client had affirmatively consented to it.
Minnesota:
In re Trust Created by Boss, 487 N.W.2d 256 (Minn. Ct. App. 1992). Attorney trustee failed to overcome the presumption of fraud that arose from his drafting a trust amendment in which he had a beneficial interest. Further, the attorney’s failure to recommend that the client seek outside counsel regarding the amendment violated MRPC 1.8(c) and was unethical. Also, the attorney failed to advise the client that the trust did not need to be irrevocable. The trial court was within its discretion to declare the amendment void, validate the revocation of the trust, and order the attorney trustee to reimburse excessive fees.
South Dakota:
In re Discipline of Martin, 506 N.W.2d 101 (S.D. 1993). In this case a lawyer was suspended for two years for multiple infractions including preparation of a will that named the lawyer as executor and trustee, which would allow him to manage the estate, including his debts to it. Lawyer never advised aged client to obtain independent advice.
Ethics Opinions
Missouri:
Informal Advisory Op. 970130 (1997). If an attorney drafts an irrevocable life insurance trust for a client and the client requests that the attorney serve as the primary trustee of that trust, then the attorney may serve the primary trustee, but he must comply with all the requirements of MRPC 1.8.
Informal Advisory Op. 970138 (1997). An attorney, who is a co-trustee of a 501(c) charitable trust, is not prohibited from performing legal services for the trust if the attorney follows the guidelines set out in MRPC 1.8. The legal services that the attorney may provide include “preparation of necessary documents for loans from trust funds secured by real estate.” The attorney, however, is prohibited from participating in the decisions of the trustees regarding hiring and compensation of the attorney to perform the legal services.
New Hampshire:
N.H. Op. 1987-88/9 (1988). With proper disclosure to a client, a lawyer may serve as fiduciary and as counsel to the fiduciary, provided the fees charged are reasonable.
South Carolina:
Op. 92-12 (1992). An attorney may draft a will which names himself as personal representative with the power to sell the home and pay himself at his regular hourly rate. He should not pay himself the personal representative’s statutory fees on top of his attorney’s fees or vice versa. The attorney should explain the situation to the client as reasonably necessary. Although the attorney would not be prohibited from witnessing the execution of the will, he would be well advised to obtain independent witnesses.
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