Beyond The Will, Client Compass

An Estate Planner’s Duty of Loyalty: Examining the Austen Family

March 11, 2021


To best enjoy this post, please be sure to first read A Family History of the Austens

Attorney Hume was Jack’s estate planning attorney. It is not surprising, then, that when Kate and Charlie had questions about their father’s estate plan following his death, they turned to Hume for advice. But what are the limits on what Hume can do for Kate and Charlie? What are the potential conflicts of interest, and what actions should Hume take to ensure that he fulfills his duties to his client – Jack – in the face of any conflict?

As Jack’s attorney, Hume must conduct himself as a fiduciary, serving Jack’s interests above all others. As a Massachusetts lawyer, Hume is subject to various duties arising from the law of agency, as well as duties inherent to a legal services contract, and overarching ethical considerations set forth in the Rules of Professional Conduct. The fiduciary duty owed by an attorney to his client is commonly described as a duty of utmost good faith and loyalty. As Jack’s attorney, Hume owes his complete and undivided loyalty to Jack, which precludes him from owing a corresponding duty to prospective beneficiaries of Jack’s estate – specifically, Jack’s children and/or his wife.

To avoid a conflict of interest, it was important for Hume to be clear with Jack at the outset, in a written engagement letter, defining both (1) the scope of representation and (2) who exactly the client is. With respect to scope, the fact pattern tells us that Hume was retained by Jack to “discuss a succession plan.” We can presume that the engagement letter states that the client in this case is Jack, not the Austen family and not Jack and Juliet jointly, as we know Jack failed to inform any of his family members of his estate plan prior to his death. (Notably, attorneys engaging in dual representation of spouses could technically be violating the rules of professional conduct. To avoid a conflict of interest, attorneys – especially estate planning attorneys – must be clear in their engagement letters regarding joint representation and provide a full disclosure of the possible effect of dual representation. For purposes of this fact pattern, however, we will assume there was not a joint representation and that Jack was Hume’s only client.)

Estate planning attorneys, such as Hume, must understand the delicacy of advising their client’s family members and potential heirs both before and after the client’s death. Attorneys must be cautious when advising non-client third parties, as such advice may bring about a conflict of interest or even a legal malpractice claim. The Rules of Professional Conduct are clear in that a lawyer shall not represent a client if the representation of that client will be directly adverse to another client, with various exceptions to that rule. Rule 1.7(b) of the Massachusetts Rules of Professional Conduct permits an attorney to represent multiple clients if the attorney reasonably believes that the interests of each can be adequately represented. Unless the interests of all heirs and devisees are truly aligned, preferably as documented with appropriate written assents and waivers, a joint representation of an estate and its beneficiaries is fraught with problems.

After Jack’s death, Hume met with Kate and Charlie to inform them of their father’s succession plan, specifically, that the remaining membership interests in the company would ultimately be divided equally among the siblings. A conflict of interest likely arose once Hume began to advise Kate with respect to her mother’s incapacity. Hume advising on the disclaimer of assets, as well as providing tax advice upon Juliet’s death, may be considered outside the scope of his original work for Jack and would – at least potentially – create a divergence of interests among the beneficiaries of Jack’s estate, pitting the children against the surviving spouse. Further, by providing legal advice such as this, Hume may be creating an unintended attorney-client relationship with both Kate and Charlie, whose interests are neither aligned with each other nor with Jack’s estate. Hume would not be able to maintain his duty of loyalty and care owed to Jack’s estate while also owing these duties to Kate and Charlie.

Hume then went even further, indicating that he would need to apply for the conservatorship in order to execute the disclaimer on Juliet’s behalf. There would certainly be a conflict of interest if Hume himself stepped into the role of Juliet’s conservator, as he would then be serving as a fiduciary for Jack’s estate and Juliet.

As many estate planning attorneys know, providing well-intentioned courtesy advice to a decedent’s family may lead to an avoidable conflict of interest situation. Clients are well-served by having attorneys who recognize these conflicts and make appropriate referrals to independent counsel where warranted, rather than one attorney attempting to wear all of the hats himself.

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