Bar Rules

Formal Advisory Opinion No. 91-1

Ethics & Discipline / Advisory Opinions / Formal Advisory Opinions / Formal Advisory Opinion No. 91-1

State Bar of Georgia
Issued by the Supreme Court of Georgia
On September 13, 1991
Formal Advisory Opinion No. 91-1


This opinion relies on Standard of Conduct 30 and Ethical Consideration 5-6 that bear upon matters directly addressed by Rule 1.7.

The Form Notification and Consent Letter, which is an addendum to this opinion, continues to be useful and valid.

For an explanation regarding the addition of headnotes to the opinion, click here.

Ethical propriety of drafter of will serving as executor.

It is not ethically improper for a lawyer to be named executor or trustee in a will or trust he or she has prepared when the lawyer does not consciously influence the client in the decision to name him or her executor or trustee, so long as he or she obtains the client's written consent in some form or gives the client written notice in some form after a full disclosure of all the possible conflicts of interest. In addition, the total combined attorney's fee and executor or trustee fee or commission must be reasonable and procedures used in obtaining this fee should be in accord with Georgia law.


QUESTION PRESENTED:

Is it ethically proper for a lawyer to be named executor or trustee in a will or trust he or she has prepared?

OPINION:


Disciplinary Standard of Conduct No. 30 provides:


Except with the written consent or written notice to his client after full disclosure a lawyer shall not accept or continue employment if the exercise of his professional judgment on behalf of his client will be or reasonably may be affected by his own financial, business, property or personal interests.


The financial interests of an executor or trustee reasonably may affect an attorney's independent professional judgment on behalf of the client. The conduct in question falls clearly within the coverage of Standard No. 30. Standard No. 30, however, provides exceptions for this type of conflict. These exceptions to a conflict of interest are the client's written consent or written notice to the client after full disclosure. These exceptions are in question here.

There is no limitation on client consent in Standard No. 30 unless the "appearance of impropriety" prohibition of Canon 9 of the Georgia Code of Professional Responsibility creates an implied limitation. It is our opinion that the conduct in question does not necessarily create an "appearance of impropriety," and we note that the "appearance of impropriety" prohibition is not included in the Standards of Conduct.

This opinion finds support in the interpretive guidance of the aspirational statement in Ethical Consideration 5-6.


EC 5-6 - A lawyer should not consciously influence a client to name him as executor, trustee or lawyer in an instrument. In those cases where a client wishes to name his lawyer as such, care should be taken by the lawyer to avoid even the appearance of impropriety.


The implication of Ethical Consideration 5-6 is that the naming of an attorney as executor or trustee in a will or trust he or she has prepared does not per se create an appearance of impropriety, but that such an arrangement creates a risk of appearing to be improper, which must be guarded against by the attorney.

A testator's or settlor's freedom to select an executor or trustee is an important freedom, and it should not be restricted absent strong justification. For a variety of reasons, the attorney may be the most appropriate choice of fiduciary for the client. The risk that some lawyers may take advantage of a lawyer-client relationship to benefit themselves in a manner not in the client's best interest should not outweigh that freedom.

This risk of self-dealing instead creates the need for restrictions that offer assurance that the naming of the lawyer as executor or trustee is the informed decision of the testator or settlor. An attorney's full disclosure is essential to the client's informed decision and consent. Disclosure requires notification of the attorney's potential interest in the arrangement; i.e., the ability to collect an executor's or trustee's fee and possibly attorneys fees. Unlike a real estate transaction where an attorney has a personal interest in the property, being named as executor or trustee does not give the attorney any personal interest in the estate or trust assets other than the fee charged. Waiver of State law fiduciary requirements in the document is permissible as long as waiver is ordinary and customary in similar documents for similar clients that do not name the attorney as fiduciary.1

In the light of the above, full disclosure in this context should include an explanation of the following:


1. All potential choices of executor or trustee, their relative abilities, competence, safety and integrity, and their fee structure;
2. The nature of the representation and service that will result if  the client wishes to name the attorney as executor or trustee (i.e., what the exact role of the lawyer as fiduciary will be, what the lawyer's fee structure will be as a lawyer/fiduciary, etc.);
3. The potential for the attorney executor or trustee hiring him or herself or his or her firm to represent the estate or trust, and the fee arrangement anticipated; and
4. An explanation of the potential advantages to the client of seeking independent legal advice.


These disclosures may be made orally or in writing, but the client's consent or the attorney's notice to the client should be in writing.

The client's consent could be obtained by having the client sign a consent form that outlines the information described above.

Consistent with other jurisdictions that have addressed the issue and the Standards and Rules of the Georgia Bar, it our opinion that it is ethically permissible for testator or settlor to name as executor in a will or trustee of a trust the lawyer who has prepared the instrument when the lawyer: (a) does not promote himself or herself or consciously influence the client in the decision; (b) fully discloses the conflict as described above, and (c) either obtains client consent in some form of writing or notifies the client in writing.2

Any executor or trustee is allowed by Georgia law to hire legal counsel, according to the needs of the estate or trust he represents, and pay reasonable fees for their services. O.C.G.A. §53-7-10. An attorney who has ethically named himself or herself as executor or trustee in an instrument he or she has prepared may act as an attorney for the estate or hire a member of his or her firm as attorney. The fiduciary and the attorney, however, must exercise caution to avoid actual or perceived conflicts of interest in this circumstance.

When a lawyer has ethically named himself or herself as executor or trustee in an instrument he or she has prepared, the lawyer can receive fees for performing both services. If, however, any costs of preparation or execution overlap, the attorney must see that these costs are charged only once. He or she may not charge both the client and the estate or trust for a single task.

As a lawyer prepares a will or trust instrument, he or she is performing services for the client-testator/settlor as a lawyer. It is the lawyer's task at this time to make sure the client's wishes for the later disposition and distribution of the client's property are integrated into a plan acceptable to the client.

The lawyer acting in his or her capacity as an executor or trustee is performing a different function altogether. It is the lawyer's task as executor or trustee to effectively implement the integrated plan for disposition and distribution of the testator's or settlor's property. Not only is the lawyer's function different, the tasks are different. The lawyer should still be appropriately and reasonably compensated whether the compensation is provided in the instrument or by statute, but an attorney acting as a fiduciary should not double dip fees charged to the client or estate.

Georgia law provides that an attorney serving as an administrator cannot double dip in fees. See McDow v. Corley 154 Ga. App. 575 (1980); and Davidson v. Story, 106 Ga. 799, 32 S.E. 867 (1899). It is recognized that if the attorney is serving as both executor or trustee and as legal counsel, it maybe difficult to sort out each task performed as one performed clearly in one capacity or the other. Any fees above Georgia's statutory provisions for compensating executors that an attorney may incur in a dual role as lawyer and fiduciary must be collected by filing an application for extra compensation with the Probate Court under O.C.G.A. §53-6-150. McDow, 154 Ga. App. at 576; and Davidson, 106 Ga. at 801. In keeping with both Georgia law and ethical considerations, the total fees charged by an attorney in such a dual role should be reasonable.3


Addendum to Formal Advisory Opinion No. 91-R1
Form Notification and Consent Letter


[MR. OR MS. FULL NAME]
[ADDRESS]
[CITY, STATE ZIP]

Dear [MR. OR MS. LAST NAME]:

     Because you have asked me to serve as Executor and Trustee under your will, I must explain certain ethical considerations to you and obtain your written consent to the potential conflicts of interests that could develop. The purpose of this letter is to summarize our discussions about your naming me as fiduciary in your will.

     A lawyer cannot prepare a will or trust in which the client names that lawyer as fiduciary unless that decision originates with the client. The lawyer should never suggest that he/she be named or promote himself/herself to serve in that capacity.

     Others who might serve as your fiduciaries include your spouse, one or more of your children, a relative, a personal friend, a business associate, a bank with trust powers, your accountant, or an investment advisor.

     I can serve as executor and trustee if that is your desire. The potential conflict arises primarily from the probability that I will hire this firm to serve as attorneys for the estate and trust. An attorney is entitled to compensation for legal services performed on behalf of the estate and trust, and the executor and trustee are also entitled to compensation for services in that capacity. When a lawyer has been named as executor and trustee pursuant to the ethical requirements of the State Bar, he/she can receive fees for performing services both as executor and trustee and as attorney as long as he/she charges only once for any single service. Further, the total compensation for serving as both fiduciary and attorney must be reasonable. If you name me as executor and trustee in your will, I and the other lawyers in my firm will charge at our normal hourly rates for all services performed. [NOTE: Modify the preceding sentence as appropriate.]

     I must also point out to you that a lawyer's independence is compromised when he/she acts as both fiduciary and as lawyer for the fiduciary. Some of the potential conflicts in this regard are:

 

1.  The question whether a particular task is "legal" or "fiduciary" in nature;

2.  The question whether services being performed are really necessary in the  circumstances;

3.  The propriety of giving the fiduciary broad disrectionary powers and exemption from bond;

4.  The lack of independent review of the document by an attorney other than the one who drafted it; and

5.  There may be other potential conflicts that have not occurred to me.


     In accordance with the ethical requirements of the State Bar of Georgia, it is necessary for me to obtain your statement that the potential conflicts of interests have been explained to you. In that regard, please review the statement of consent below. If it is satisfactory to you, please sign and return the enclosed copy to me. If you want to discuss any point further, please call. If you decide not to execute the consent, please advise me whom you would like to serve as executor and trustee instead of me.

     If you have any doubt concerning the information contained in this letter or the effect of signing the consent, you should discuss it with another lawyer of your choice.

                                                                Sincerely,
       

                                                                ________________________
                                                                Attorney

 
CONSENT


     I, ______________________ (Client) _______________, have voluntarily named as executor and trustee in my will and trust, ______________________(Attorney) _________________, who prepared the instrument in his/her capacity as my attorney. Mr./Ms. ________________ (Attorney) ______________ did not promote himself/herself or consciously influence me in the decision to name him/her as executorand trustee. In addition, Mr./Ms. _____________ (Attorney) ______________ has disclosed the potential conflicts which he/she thinks might arise as a result of his/her serving as both executor and trustee and as attorney for the estate and trust. An explanation of the different roles as fiduciary and attorney, an explanation of the risks and disadvantages of this dual representation, an explanation of the manner in which his/her compensation will be determined, and an opportunity to seek independent legal advice were provided to me prior to my signing this consent.

Date__________________                    _________________________________

(Signature)



1 For example, granting broad powers to a fiduciary or relieving the fiduciary of return or bond requirements is a common practice, can substantially reduce the expense of administration of an estate or trust, and does not relieve the fiduciary of the duty to administer the estate properly in or reduce substantially the rights of the beneficiaries to enforce that duty. On the other hand, a provision that attempted to relieve the fiduciary of negligence would probably not be ordinary and customary and would be improper.

In Pennsylvania, an attorney ethically may act as co-executor in a will that he or she prepares as long as the attorney advises the client (in a way never specified) of the potential problem that the attorney may be required to testify regarding the will if it is challenged. Professional Guidance Opinion 80-2 of the Philadelphia Bar Association. The attorney also may not take advantage of his position as draftsman to promote himself or herself or "sell" the ideas to the client. See also Professional Guidance Opinion 8-17 of the Philadelphia Bar Association (concerning an attorney naming himself successor-trustee in a will he drafted).

3  In accord. Okl. Opin. No. 298 (Feb. 28, 1991) (attorney serving as executor of estate and as attorney for the estate may charge reasonable fees for each so long as charges do not overlap.); Ala. Opin. No. 81-503 (undated) (attorney may serve as administrator of estate and as attorney for the estate and may charge reasonable fees for each); Wis. Opin. No. E-80-14 (Dec. 1980) (a lawyer, appointed as guardian, may serve as attorney for the guardian, and may charge reasonable fees for performing in both capacities).



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