Can a West Virginia lawyer participate in a living-trust marketing program where a nonlawyer franchisee sells the trust, an out-of-state company prepares it, and the lawyer only supervises signing?

Plain-English summary

An attorney interested in participating with a living-trust marketing franchise asked whether participation would violate the Rules of Professional Conduct. Based on its understanding of how the trusts were actually marketed, the Committee concluded that a participating attorney would violate Rule 5.5(b). As described, Family Trust, Inc. marketed living trusts through independent agents in several states; the West Virginia agent was a nonlawyer franchisee operating as Trust Financial Group (with some agents using Trust Group of America). The marketing began with an advertised free educational seminar stressing a living trust's advantages for avoiding probate and reducing estate taxes; no attorney spoke. Attendees were encouraged to meet one-on-one with the franchisee, who advised the client to have a living trust, with no attorney present, and the client paid for the trust at that meeting without consulting an attorney.

The Committee noted that although some franchise guidelines suggested the client consults an attorney who makes the final determination of the trust's appropriateness, in practice that procedure was not followed in West Virginia. After purchase, the franchisee gathered the client's information and documents and sent them to a regional office outside West Virginia; the living trust and ancillary documents the Committee reviewed (such as a pour-over will and power of attorney) stated they were prepared by Family Trust, Inc. of Roseville, Minnesota. The West Virginia attorney's only function was to supervise execution of the documents, and the only time the attorney met the client was after the client had purchased the trust and was ready to sign, usually with the franchisee present; the attorney's fee was paid by the franchisee.

The Committee concluded the franchisee was engaged in the unauthorized practice of law, because the franchisee charged and collected the fee for the legal document and an entity in another state prepared the documents without consulting the client, leaving the client with no opportunity to consult an attorney looking out for the client's interests who would then prepare the document. The West Virginia attorney was therefore assisting a person who is not a member of the West Virginia State Bar in activity constituting the unauthorized practice of law, in violation of Rule 5.5(b). Although the Committee has no jurisdiction over non-lawyers, it is authorized under Article VI, Section 4 of the State Bar's By-Laws to render advisory opinions on any question of professional conduct, and it found that participation by a West Virginia-licensed lawyer in the living-trust marketing program would be unethical. The Committee also directed the Office of Bar Counsel to refer the question of unlawful practice by nonlawyers and corporations to the Unlawful Practice Committee.

Currency note

This opinion was issued in 1992, before the West Virginia Supreme Court of Appeals' comprehensive 2015 revision of the West Virginia Rules of Professional Conduct (effective January 1, 2015). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer act as the signing attorney for a nonlawyer-marketed living trust?

A: No. The opinion concluded that supervising execution of documents sold by a nonlawyer franchisee and prepared out of state assists the unauthorized practice of law and violates Rule 5.5(b).

Q: What made the franchisee's conduct the unauthorized practice of law?

A: The opinion concluded the franchisee charged and collected the fee for the legal document while an out-of-state entity prepared it without consulting the client, so the client had no opportunity to consult an attorney looking out for the client's interests.

Q: Could a bank or financial planner ever recommend a living trust?

A: The opinion noted in a footnote that bank officers, accountants, or financial planners may recommend a living trust but must refer the client to an attorney to prepare the legal document; the only trust document such institutions should prepare is a grantor-funded inter vivos revocable trust to let the institution invest money for the grantor, with no testamentary direction.

Background and rules framework

The opinion interpreted West Virginia's Rule 5.5(b) (Model Rule 5.5), which bars a lawyer from assisting a person who is not a member of the bar in activity constituting the unauthorized practice of law. The Committee applied the rule to a marketing arrangement in which a nonlawyer sold and charged for a legal document prepared by an out-of-state company, with the lawyer limited to supervising signing. The Committee acted under its By-Laws authority (Article VI, Section 4) to opine on professional conduct and referred the nonlawyer-practice question to the Unlawful Practice Committee.

Citations and references

Rules of Professional Conduct:

• Model Rule 5.5 / WV Rule 5.5(b) (assisting a nonlawyer in the unauthorized practice of law)

See also

• CA Op. 1997-148: Lawyers, Non-Lawyer Living-Trust Marketers
• ISBA Ethics Op. 90-20: Lawyer and Living-Trust Mills
• WV Ethics Op. 94-04: Partnership-Sounding Firm Names

Source

• Landing page: https://wvodc.org/Legal-Ethics-Opinion
• Original PDF: https://storage.googleapis.com/msgsndr/Rgd68xOkcVdteTsBkf6O/media/66a7ea7df10bdc2c8aae4496.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

L.E.I. 92-03

PARTICIPATION BY ATTORNEY IN LIVING TRUST
MARKETING FRANCHISE

An attorney interested in participating with a living trust marketing franchise requested an opinion from the Committee on Legal Ethics to determine if his participation would violate the Rules of Professional Conduct. Based upon the Committee's understanding of how the trusts are actually marketed, it is the Committee's opinion that an attorney who participates would be violating Rule 5.5(b) of the Rules of Professional Conduct.

Family Trust, Inc. markets living trusts. It contracts with independents agents in several states, including Illinois, Minnesota, Wisconsin, New Jersey, West Virginia and Virginia. The independent agent in West Virginia is a nonlawyer (hereinafter referred to as "the franchisee") operating under the business name Trust Financial Group. Some agents apparently operate under the name, Trust Group of America.

The first step in the marketing process is to advertise a free educational seminar on living trusts. The ads stress the advantages of a living trust as a way of avoiding probate and reducing estate taxes. No attorney speaks at the seminar. Prospective clients who attend the seminar are encouraged to make an appointment to meet one-on-one with the franchisee.

At this meeting, the franchisee advises the client that he or she should have a living trust. No attorney is present. The client pays for the living trust at that meeting without consulting an attorney. The guidelines provided to the Committee by the franchisee, which appear to be from Trust Group of America, state that after the initial meeting with the franchisee, the client consults with an attorney who makes the final determination of the appropriateness of a living trust. In practice, this procedure is not followed in West Virginia.

After the client purchases the living trust, the franchisee gathers the information and necessary documents from the client and sends it to a regional office outside the State of West Virginia.[1] The Committee reviewed a living trust actually prepared for a West Virginia client. The living trust and ancillary documents, such as a pour-over will and power of attorney, state that they are prepared by Family Trust, Inc. of Roseville, Minnesota.

The West Virginia attorney's only function is to supervise the execution of the documents. Although the guidelines suggest otherwise, the only time that the attorney meets the client is after he or she has purchased the living trust and is ready to sign the documents. The franchisee is usually present, too. The attorney's fee is paid by the franchisee.

The Committee believes that the franchisee is engaged in the unauthorized practice of law. The franchisee charges and collects the fee for the legal document, and an entity in another state prepares the documents without consulting the client. The client has no opportunity to consult an attorney looking out for his or her interests who will then prepare the legal document.[2]

The West Virginia attorney is therefore assisting a person who is not a member of The West Virginia State Bar in the performance of activity that constitutes the unauthorized practice of law, in violation of Rule 5.5(b) of the Rules of Professional Conduct.

Although the Committee on Legal Ethics has no jurisdiction over non-lawyers, it is authorized to render advisory opinions on any question of professional conduct. Article VI, Section 4 of the By-Laws of The West Virginia State Bar. The Committee finds that participation by a lawyer licensed by the West Virginia State Bar in the living trust marketing program as set forth above would be unethical.

The Committee also directs the Office of Bar Counsel to refer the question of unlawful practice by nonlawyers and corporations to the Unlawful Practice Committee of The West Virginia State Bar.

Dated:

Charles M Love, III, Chairman
Committee on Legal Ethics
The West Virginia State Bar

[1] In one case of which the Committee is aware, the franchise did not request a comprehensive list of assets.
[2] Bank officers, accountants or other financial planners may recommend a living trust to their clients. They must then refer the clients to an attorney for preparation of the legal document. The only trust document banks or other financial institutions should prepare are grantor funded inter vivos revocable trusts to permit the bank or institution to invest money for the grantor. Upon the grantor's death, the money is turned over to the grantor's personal representative. There is no testamentary direction in such a document.