May a Missouri estate-planning lawyer draft a revocable trust naming the lawyer as compensated successor trustee?

Plain-English summary

An elderly client with no immediate family asked the drafting lawyer to become successor trustee if the client died or resigned. The trust would pay reasonable compensation for the successor-trustee services.

The opinion permits the arrangement only if Rule 4-1.8(a) is satisfied. The transaction and the terms of the lawyer's interest must be fair and reasonable and disclosed in understandable writing.

The lawyer must also advise the client in writing that independent legal advice is desirable and give a reasonable opportunity to obtain it. Finally, the client must give informed consent in a signed writing covering the essential terms and the lawyer's role, including whether the lawyer represents the client in the transaction.

In practice

Under this opinion, reasonable trustee compensation does not remove the lawyer's personal-interest transaction from Rule 4-1.8(a). The drafting and future fiduciary role may be combined only with all three written fairness, independent-advice, and informed-consent protections.

Common questions

Q: May the drafting lawyer be named successor trustee?

A: Yes, if the lawyer complies with Rule 4-1.8(a).

Q: Must the transaction terms be in writing?

A: Yes. They must be fair and reasonable and fully disclosed in writing in a manner the client can reasonably understand.

Q: Must the client be advised to seek another lawyer's advice?

A: Yes. The advice must be written, and the client must have a reasonable opportunity to consult independent legal counsel.

Q: What must the client's consent cover?

A: The essential transaction terms and the lawyer's role, including whether the lawyer represents the client in the transaction, in a writing signed by the client.

Background and rules framework

Missouri Rule 4-1.8(a) governs the lawyer's agreement to become a compensated successor trustee in an instrument the lawyer prepares. Comments [1] through [4] provide additional guidance on business transactions with clients.

Citations and references

Rules of Professional Conduct:

• Missouri Rule 4-1.8(a), Comments [1] through [4] (business transactions with clients)

Other opinions cited:

• Missouri Informal Opinions 970138, 970130, 20050041, and 20030019

See also

• Georgia Formal Advisory Op. 91-1: Lawyer Named Executor or Trustee
• Washington Ethics Op. 926: Lawyer as Trustee and Conflict
• Maine Ethics Op. 47: Estate Representative and Beneficiaries

Source

• Landing page: Missouri Informal Opinion 2023-08

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Question: Lawyer is preparing estate planning documents for Client, an elderly individual with no immediate family members. Client will be named as trustee on a revocable living trust, but Client asks Lawyer to serve as successor trustee in the event Client dies or resigns as trustee. The revocable living trust would provide reasonable compensation for services rendered as successor trustee in the event Client dies or resigns as trustee. May Lawyer ethically prepare and participate in such an arrangement?

Answer: Lawyer must comply with the requirements of Rule 4–1.8(a) to agree to serve as successor trustee and receive reasonable compensation for such services in the event Client dies or resigns as trustee. See Missouri Informal Opinions 970138 and 970130.

Rule 4–1.8(a) provides:

A lawyer shall not enter into a business transaction with a client (…) unless:

(1) the transaction and terms on which the lawyer acquires an 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.

Lawyer should carefully review Comments [1] – [4] to Rule 4–1.8 for further guidance, as well as Missouri Informal Opinions 20050041 and 20030019.