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Testamentary gifts: Even if there is a will, there may not be a way
By Susan J. Michmerhuizen
ETHICSearch Research Counsel
ABA Center for Professional Responsibility
Twenty years ago, you were retained by an elderly woman to represent her in various matters related to her small business. Over the years, you have negotiated contracts, handled real estate closings and have given general employment law and tax advice when needed.
Eventually, she put you on a general retainer to ensure your availability whenever a legal issue arose, and it was not uncommon for her to call you almost every day, sometimes just to talk about personal matters that had nothing to do with her business.
Recently, the client has asked you to prepare an estate plan. She has no direct descendants, and she has told you that she wants to leave the bulk of her estate to several charities. She would also like to leave you a gift.
Can you draft the will giving yourself the gift?
Rule 1.8 (c) Conflict of interest: Current clients: Specific rules of the ABA Model Rules of Professional Conduct contain an express provision on the topic and state as follows:
(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.
Paragraphs 6 and 7 of the Comment to Rule 1.8 provides further:
Gifts to Lawyers
 A lawyer may accept a gift from a client, if the transaction meets general standards of fairness. For example, a simple gift such as a present given at a holiday or as a token of appreciation is permitted. If a client offers the lawyer a more substantial gift, paragraph (c) does not prohibit the lawyer from accepting it, although such a gift may be voidable by the client under the doctrine of undue influence, which treats client gifts as presumptively fraudulent. In any event, due to concerns about overreaching and imposition on clients, a lawyer may not suggest that a substantial gift be made to the lawyer or for the lawyer’s benefit, except where the lawyer is related to the client as set forth in paragraph (c).
 If effectuation of a substantial gift requires preparing a legal instrument such as a will or conveyance, the client should have the detached advice that another lawyer can provide. The sole exception to this Rule is where the client is a relative of the donee.
We can take one clear directive from Rule 1.8 (c): If a client wants to make a substantial bequest to his or her lawyer, the lawyer should not draft the will or other instrument, such as a trust, that carries out this intent. If the client is not related to the lawyer in one of the ways specified in the rule, any gift left to the lawyer could be void under local statutes. Plus, there is a long-held presumption of undue influence that will have to be countered in any will contest. Comment (3) to Rule 1.8 spells this out: “such a gift may be voidable by the client under the doctrine of undue influence, which treats client gifts as presumptively fraudulent.” This presumption can operate to place the burden of proof on the lawyer as to why the gift is not the product of undue influence. See Agee v. Brown, 73 So.3d 882, (11/16/11) (lawyer who drafted a will trust and a deed that gave a remainder interest in an enhanced life estate to the lawyer and his wife faces rebuttable presumption of undue influence); New York State Bar Committee on Professional Ethics Opinion 610 (06/20/90) (in New York, upon probate, surrogates must investigate any bequest to the attorney who drafted the will. The attorney must submit an affidavit explaining the facts and circumstances of the gift. If the surrogate is not satisfied with the explanation, a hearing is held to determine whether the attorney’s bequest was the result of undue influence.)
Where a will is found to be the product of undue influence, many states’ statutes declare the will to be void. Additionally, in some states, such as California and Texas, these gifts to lawyers using a will or other conveyance drafted by the lawyer are invalid through statute. One ethics committee has advised that if the client refuses to seek independent legal advice, then the lawyer may not draft the will or other instrument. Los Angeles County Bar Association Ethics Opinion 462.
The bottom line is: If someone wants to leave the lawyer or a family member of the lawyer a substantial bequest, it will be ethically and practically expedient for the lawyer to urge the testator to seek the independent advice of a third lawyer. Comment (7) to the rule is unequivocal: “ If effectuation of a substantial gift requires preparing a legal instrument such as a will or conveyance the client should have the detached advice that another lawyer can provide.”
What if the lawyer gets a firm member or other lawyer to draft the will? At first glance, this seems to satisfy the black letter requirements of the rule. Looking further, Rule 1.8 (k) provides that where one lawyer in a firm is disqualified from undertaking an action because of a conflict of interest, that conflict is also imputed to the other lawyers in the firm. See also ABA Model Rule 1.10 (a). Accord, Restatement of the Law Governing Lawyers §127 cmt. a. Having an outside lawyer draft the instrument without the opportunity to provide independent advice is also not adequate to avoid the presumption of undue influence, the lawyer is seen as acting as a “mere scrivener” and the presumption remains. See In re Colman, 885 N.E.2d 1238 (Ind. 2008) (lawyer who “actively participated” in preparation of will naming lawyer as primary beneficiary and son as contingent beneficiary violated rule notwithstanding that instrument prepared by another lawyer).
Also, this particular conflict cannot be waived by the client, unlike many other possible conflicts of interest. Maryland Attorney Grievance Comm’n v. Stein, 819 A.2d 372, 19 Law. Man. Prof. Conduct 172 (Md. 2003); Restatement of the Law Governing Lawyers §127 cmt. a. Maryland State Bar Ass'n Comm. on Ethics, Op. 2003-08.
As well as possibly having the testamentary gift invalidated, a lawyer drafting an instrument giving himself or a family member a gift from an unrelated client may also face lawyer disciplinary charges based on Rule 1.8 (c). In re Blair, 840 So. 2d 1191, (La. 2003) (lawyer suspended for three months for drafting a will containing a legacy to the lawyer’s wife); Toledo Bar Ass’n v. Cook, 778 N.E.2d 40, (Ohio 2002) (one-year suspension with six months stayed for drafting will with bequest to lawyer’s siblings). Los Angeles County Bar Association Ethics Opinion 462 held that a lawyer may be disciplined for drafting a will in which he receives a substantial gift because the probability of the presumption of undue influence being applied raised questions about the competence of the lawyers’ legal representation. Massachusetts Bar Association Opinion 2005-2(2005) stated that a lawyer may not keep a substantial gift from a client unless the lawyer advised the client to obtain independent counsel and must consider whether in the future the gift could be used to challenge the independence of the lawyer or the competence of the client.
Lawyers faced with disciplinary action have used the excuse that they did not know that what they were doing was prohibited by the ethics rules, but to no avail. The ABA/BNA Lawyers’ Manual on Professional Conduct 51:602 notes that although lawyers who have drafted a bequest to themselves often claim lack of knowledge of the ethics prohibition, ignorance is no defense to a disciplinary charge. In re Blair, La., No. 02-B-2164, 2/25/03); See In re Grevemberg, 838 So. 2d 1283 (La. 2003). (lawyer suspended for one year despite claims of ignorance of Rule 1.8 (c).); Maryland Attorney Grievance Comm’n v. Stein, 819 A.2d 372, (Md. 2003). In re Schenck, Or., No. S054585, 10/9/08).
Gifts to lawyer’s relatives or friends also prohibited
Rule 1.8 (c) extends the prohibition against drafting an instrument that conveys a gift to the drafting lawyer or a person related to the lawyer. This group is defined as people with whom the lawyer has a “close, familial relationship.” Therefore, it is also improper for a lawyer to write a will for an unrelated client that makes bequests to the lawyer’s family. E.g., In re Blair, 840 So. 2d 1191, 19 Law. Man. Prof. Conduct 171 (La. 2003) (legacy to lawyer’s wife); Toledo Bar Ass’n v. Cook, 778 N.E.2d 40, 18 Law. Man. Prof. Conduct 716 (Ohio 2002) (bequest to lawyer’s siblings).
Gifts to charities associated with the lawyer
State bar ethics opinions also find a conflict of interest if the lawyer drafts a will or other instrument that makes a gift to a charity with which he is associated. In Kentucky Bar Association Opinion E-391 (1996), the Kentucky Committee opined that a lawyer may not provide estate planning services to a charitable organization’s members at a reduced fee conditioned on the member’s making a bequest to the organization.
The Maryland Bar Committee opined that a lawyer who is a member of his church’s “legacy” committee may not prepare wills for parishioners who want to bequeath property to the church. The panel found that the lawyer’s responsibility for advancing the church’s financial interests would conflict with his independent professional judgment in representing the parishioners. This conflict could not be cured by consultation and client consent. Maryland Ethics Opinion 2003-08 (2003). The New Hampshire Bar’s ethics committee examined a lawyer’s role as chair of the hospital’s endowment committee, which presents “a personal interest of the lawyer” as evaluated alongside a client’s desire to make a gift to the hospital. The committee concluded that a full discussion of the potential conflicts and obtaining the client’s informed consent, confirmed in writing, would alleviate concerns and allow the lawyer to draft the client’s will. New Hampshire Bar Ass'n Ethics Comm., (2012). The Oregon Committee found that while a conflict was present, under Rule 1.7 (b), it would not block the representation if both donor and client consent was obtained. Oregon State Bar Opinion 1991-116 (7/91). Section 127(1) of the Restatement forbids only the drafting of an instrument that makes a gift to the drafting lawyer himself. It does not prevent a gift to the lawyer’s family or an institution the lawyer designates. Restatement of the Law Governing Lawyers §127 cmt. c.
Amount of the gift
The rules speak in terms of a “substantial gift.” Several resources help define that phrase. The Model Rules comment states “A lawyer may accept a gift from a client, if the transaction meets general standards of fairness. For example, a simple gift such as a present given at a holiday or as a token of appreciation is permitted.” See also, Washington State Bar Association Opinion 86-1 (undated) holding that the value of a gift should be assessed at the time the will is prepared, and both the size of the estate and the financial status of the lawyer should be considered when deciding if the gift is substantial.
Section 127(2) of the Restatement (Third) of the Law Governing Lawyers (2000) states that lawyers are forbidden to accept a gift from a client, including a testamentary gift, unless (a) the lawyer is a relative or “other natural object of the client’s generosity”; (b) the value and benefit of the gift are “insubstantial in amount”; or (c) the client has first received independent advice or been encouraged to seek such advice. The client’s relative wealth bears on whether a gift is “substantial,” according to Comment f.
An additional resource in this area of law is the American College of Trust and Estate Counsel Commentaries on the Model Rules of Professional Conduct (4th ed. 2006) (ACTEC). Their commentary to Rule 1.8 states: “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.”
Exception for drafting wills for relatives of lawyer
Many lawyers, if not most, will be asked to do some legal work for friends and family from time to time. The drafting of a will or other testamentary documents is one of those legal services that most people need and is often one way a lawyer is asked for a favor. In many situations, the lawyer may also be a likely heir. Rule 1.8 (c) makes an express exception for this circumstance: “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. The ABA/BNA Lawyers’ Manual on Professional Conduct 51:603 defines this phrase to mean “that a lawyer may draft a self-enriching will for a cohabiting domestic partner or a longtime friend with whom the lawyer has a family-like relationship.”
Section 127(1) of the Restatement of the Law Governing Lawyers lifts the drafting prohibition for a lawyer who is a relative of the client or “other natural object of the client’s generosity.” Nonetheless, they must not be “significantly disproportionate” to those received by others. This advice is the same as that given by the American College of Trust and Estate Counsel.
Several state bar ethics committees agree. The Oregon State Bar advised that a lawyer may draft a will for the lawyer’s parent in which the lawyer would be left a substantial gift. Oregon State Bar Opinion 2005-93; (2005) The Pennsylvania Bar Association would allow a lawyer to draft a will for his wife’s stepmother in which the wife receives a gift. Pennsylvania Bar Association Opinion 95-66 (undated); in a different opinion the Pennsylvania Bar discussed a method for determining how degrees of relatedness apply to this rule. A lawyer may draft a first cousin’s will in which the lawyer receives a gift; the lawyer and the first cousin are related within the second degree. After examining common law, canon law and civil law methods of counting degrees, the committee interprets Rule 1.8 as intending the common law method for determining familial relations, whereby one starts with the common ancestor and counts down separately to each person, with the higher of the two separate numbers determining the count. Pennsylvania Bar Association Opinion 93-17 (3/1/93). See also Pennsylvania Bar Opinion 93-129 (aunt by marriage considered to be a relative for the purposes of Rule 1.8(c)).
Lawyers who have clients who wish to leave them gifts as part of their estate plan must proceed with extreme caution. At a minimum, a client should be afforded the opportunity to consult with independent legal counsel regarding the matter. Lawyers must also be mindful of the potential disciplinary and legal consequences of such gifts and should check the applicable case law, ethics opinions and rules of professional conduct of the jurisdiction.
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