Opinion 99-9
(March 2000)

The inquirer is an attorney who has been asked by elderly clients to prepare a lifetime trust. The attorney is to be named trustee. During the life of the settlers of the trust, the trust will provide for the exclusive care and benefit of the settlers. Thereafter, to the extent any principal or income remains, it is to be given to the attorney as trustee and is to be distributed to entities "for any religious, social, educational, historical, benevolent, or other worthy cause" in the discretion of the trustee. The settlers' wills also provide that any residuary estate is to be given to the attorney as trustee and to be distributed in accordance with the terms of the trust. The inquirer asks if such an arrangement violates the Pennsylvania Rules of Professional Conduct ("the Rules").

Rule 1.8(c) states that:

A lawyer shall not prepare an instrument giving the lawyer or a person related to the lawyer as a parent, child, sibling or spouse any substantial gift from the client, including a testamentary gift, except where the client is related to the donee within the third degree of relationship.

Pursuant to Rule 1.8(c), the question to be decided is whether either the wills or the trust provide a "substantial gift" to the attorney. Although the trust is a broadly discretionary one, fiduciary laws require that the trustee properly administer, and not wrongly benefit from the administration of the trust. Therefore, under the facts given to the Committee, there is no reason to believe that the lawyer will receive any benefit from the trust other than any legitimate fees that would be due to the lawyer acting as executor and/or trustee. The mere fact that an attorney acts as executor and/or trustee and receives the reasonable standard fee for such services is not usually considered to be a "gift" under an instrument let alone a "substantial gift" prohibited by Rule 1.8(c). Thus, absent additional circumstances not set forth in the inquiry, it is opinion of the Committee that the arrangement would not be considered a violation of Rule 1.8(c).

However, the fact the lawyer preparing the instruments is also acting as executor and/or trustee creates a potential conflict of interest which must be addressed by complying with the provisions of Rule 1.8(a). The lawyer must fully disclose the potential conflicts to the client and receive the clients' knowledgeable consent to the dual capacities of the attorney. Finally, any fee charged to the client for the lawyer's services as executor and/or trustee must comply with any applicable requirements of Rule 1.5.

 

The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.