THE ETHICAL, LEGAL, AND PRACTICAL CONSIDERATIONS INVOLVING THE - - PDF document

THE ETHICAL, LEGAL, AND PRACTICAL CONSIDERATIONS INVOLVING THE FINANCIAL EXPLOITATION OF SENIORS Francis J. Rondoni Chestnut Cambronne PA Minneapolis, Minnesota Stuart C. Bear Chestnut Cambronne PA Minneapolis, Minnesota Elizabeth C. Henry Chestnut Cambronne PA Minneapolis, Minnesota

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TABLE OF CONTENTS Page I. DEATH BED CHANGES TO ESTATE PLAN .......................................................................... 1

• A. The Need for Testamentary Capacity

..................................................................................... 2

• B. Undue Influence ....................................................................................................................

2

• C. When Undue Influence Becomes Criminal ............................................................................

3

• D. Relationship Between Capacity and Undue Influence ............................................................

4 II. DISPUTED TRANSFER OF AN INCAPACITATED OR ELDERLY RELATIVE.................... 4

• A. The Hardship of Clandestine Transfers

.................................................................................. 5

• B. Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act

............................. 5

• C. Possible Loopholes and Outcomes

......................................................................................... 8 III. REPRESENTING A CLIENT WHOSE CAPACITY APPEARS TO BE DIMINISHED ........... 8

• A. Option1: Draft the Will .........................................................................................................

9

• B. Option 2: Decline to Draft the Will

........................................................................................ 9

• C. Option 3: Insist on Meeting Alone

....................................................................................... 11

• D. Options 4 and 5: Contact Family Members or Adult Protection ...........................................

11 IV. KNOW WHO YOUR CLIENT IS ............................................................................................ 12

• A. Elderly Prescription Drug and Alcohol Use ...........................................................................

1

• B. Statutes................................................................................................................................

13

• C. Case Law ............................................................................................................................

14

• D. Plan “B,” Take the Keys

...................................................................................................... 15 V. WHAT TO DO WHEN THERE IS NO HEALTH CARE DIRECTIVE .................................... 16

• A. Health Care Directives Generally ........................................................................................

16

• B. Family Decision-Making Statutes

........................................................................................ 17

• C. No Directive and No Surrogate Statute ................................................................................

17 VI. UNAUTHORIZED PRACTICE OF LAW ................................................................................ 19

• A. Unauthorized Practice of Law .............................................................................................

19

• B. SEC Regulatory Notice 17-11 .............................................................................................

20 VII. CLIENT JUST DIED OR IS INCAPACITATED; FAMILY MEMBERS OR CAREGIVERS ARE EMPTYING THE HOUSE ............................................................................................... 23

• A. Legitimate Emptying

........................................................................................................... 24

• B. Illegitimate Emptying

.......................................................................................................... 24

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• C. Statute of Frauds .................................................................................................................

25

• VIII. TRUSTEE SUED BY TRUST BENEFICIARIES

..................................................................... 26

• A. Lawyers Representing Trustees and Other Fiduciaries

......................................................... 26

• B. UTC §802: Duty of Loyalty.................................................................................................

31

• C. UTC §803: Impartiality .......................................................................................................

32

• D. UTC §804: Prudent Administration .....................................................................................

32

• E. UTC §813: Duty to Inform and Report ................................................................................

32

• F. UTC §1001: Remedies for Breach of Trust

.......................................................................... 33

• G. UTC §1002: Damages for Breach of Trust...........................................................................

34

• H. UTC §1006: Reliance on Trust Instrument ..........................................................................

34 IX. EXECUTING DOCUMENTS DURING COVID-19 ................................................................ 34

• A. Best Practices vs. Statutory Requirements ...........................................................................

35

• B. Remote Ink-signed Notarization (RIN) and Remote Online Notarization (RON) .................

35 X. ATTORNEY AIDER AND ABETTOR LIABILITY ................................................................ 36

• A. Restatements of the Law......................................................................................................

37

• B. Elements .............................................................................................................................

39

• C. Case Law ...........................................................................................................................

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THE ETHICAL, LEGAL, AND PRACTICAL CONSIDERATIONS INVOLVING THE FINANCIAL EXPLOITATION OF SENIORS Francis J. Rondoni Chestnut Cambronne PA Minneapolis, Minnesota Stuart C. Bear Chestnut Cambronne PA Minneapolis, Minnesota Elizabeth C. Henry Chestnut Cambronne PA Minneapolis, Minnesota123 I. DEATH BED CHANGES TO AN ESTATE PLAN CASE STUDY: The helpful sibling. The recession in the late 2000s was hard on Tom. Tom, an adult in his 40s, always had difficulty holding a job. He was fiercely independent and often times had difficulty getting along with others. During the recession, he found himself out of work and had difficulty securing employment. During this time period, his mother, Mabel, was becoming increasingly frail, but wanted to maintain living in her home. Tom, his two sisters, Lisa and Michelle, and mom thought it best for Tom to move in with mom, to take care of her. This would keep mom out of a care facility, allow mom to maintain living in her home, and provide Tom the ability to have a place to live. While there was no formal compensation arrangement mentioned, mom’s money continued to be used to pay for the food and the expenses associated with the homestead property. Mom recently died. The sisters have a number of questions about mom’s remaining assets. While they do not want to be greedy (because as they keep saying in unison, it’s not about the money), Tom said that mom had no money left other than the homestead property which Tom said mom promised to him. Tom produces a will which was done about a week before mom died, which Tom acknowledged he “assisted” mom in preparing, by obtaining the form from the internet. Tom also said that mom’s remaining assets were all held jointly between Tom and mom or otherwise payable by beneficiary form to Tom, as “that is what mom wanted.” Tom refuses to disclose the amount of the financial assets, but the daughters know from anecdotal evidence that mom and dad lived a comfortable, middle-class life, were very much savers, and did not have any extravagant

• expenditures. In fact, they point out that the reason Tom was to take care of mom in the home was

to allow mom to remain living in the home, and also avoid the high cost of skilled care.

1 The authors wish to thank Ryan Prochaska for his invaluable assistance in writing these materials. 2 The authors wish to thank Mary Radford for her contributions in preparing these materials. 3 Portions of this material were prepared for the 51st Annual Heckerling Institute on Estate Planning, scheduled for January 9-

13, 2017 in Orlando, Florida. They are reprinted here with the permission of the Heckerling Institute and the University of Miami School of Law.

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A. Lack of Testamentary Capacity As a threshold matter, a testator must have testamentary capacity to make a will. This includes knowing the nature and extent of his or her property, who will take that property, and the plan for disposing of property in that way.4 Testamentary capacity is a relatively low bar to meet, so low, in fact, that not even a death bed change to a will creates the presumption that the testator did not have testamentary capacity.5 However, such death bed changes are closely scrutinized and often invite legal challenges precisely because the will is made in such close proximity to the death of the testator such that it would not be unreasonable to question whether the testator really did understand what effect his will or changes to his will might mean.6 Someone who is near death by definition is either mentally or physically frail, or possibly

• both. Therefore, near death testamentary changes run the risk of being challenged for lack
• f testamentary capacity. For example, an estranged, previously disinherited, son is given

an inheritance in an equal share to his siblings after a deathbed change to his father’s will. Siblings may be further encouraged to contest a deathbed will under similar circumstances, particularly when the bequest is to an individual who would not normally be the subject of the decedent’s bounty. B. Undue Influence Often times, when an individual is near death, they are particularly vulnerable to influence

• r suggestion. In fact, because of this proximity to death and the uncertainty as to the

existence of testamentary capacity, a child, caregiver, or beneficiary of the original Will should be on the lookout for undue influence, or persuasion by a third party that substitutes the wishes of the party or another for those of the testator so that the testator produces and/or executes a will he or she otherwise would not have.7 Unfortunately, many times the individuals the elder trusts are the one’s exerting undue

• influence. For example, a child threatens to stop caring for their elderly parent and take

them to a nursing home unless their parent updates their will to leave that child an increased percentage of the estate. Most states recognize that some kind of presumption for undue influence arises from the presence of some elements of undue influence.8 Four states recognize a presumption of undue influence when the contestant proves that the testator and the influencer had a confidential relationship and the influencer received unconscionable benefits from the testator's post-death distribution plans.9 Twenty-two states recognize a presumption of undue influence when the contestant shows the testator had a confidential relationship with

4 See, Norwest Bank Minn. N., N.A. v. Beckler, 663 N.W.2d 571, 579 (Minn. Ct. App. 2003). 5 See, Colleen F. Carew et al., Testamentary Capacity—Conditions That May Affect Testator’s Capacity—Old Age, Ill Health,

Physical Weakness—“Deathbed” Will Not Presumptively Invalid, 2 Harris N.Y. Estates: Probate Admin. & Litig. § 24:246 (6th ed. 2020).

6 Id. 7 Michael J. Cote, Under Influence in Execution of Will, 36 Am. Jur. Proof of Facts 2d 109, § 1 (March 2020). 8 Eunice L. Ross & Thomas J. Reed, Will Contests § 7:10 (2d ed.). 9 Id. (CT, KY, MS, UT).

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the influencer, who in turn procured post-death benefits from the testator which were unconscionable.10 Generally, the presumption arises when there is a confidential relationship between the testator and the person encouraging deathbed changes to the will, typically along with suspicious circumstances and/or when a third party acquires “unconscionable” benefits as a result (i.e., the new beneficiary suddenly inherits most of the testator’s property in the revised will; also, when the new beneficiary has attempted to isolate the testator from family members and/or original will beneficiaries). Practitioners recognize that attorneys-in-fact are not immune from unduly influencing the principal-testator they have been selected to protect.11 Rather, financial exploitation has become one of the leading types of elder abuse and it is often done at the hands of attorneys- in-fact.12 If undue influence is found, then the death bed will may be determined invalid in whole or in part, and property may pass according to the original will, or intestate succession.13 As a reminder, undue influence analysis likewise also applies to lifetime transfers (including deeds, gifting, etc.) such as when the third party “deprives the donor of free agency in order to obtain a post-death benefit.”14 That is, undue influence is not limited

• nly to wills but also to will substitutes.

C. When Undue Influence Becomes Criminal Relatedly, many states have implemented specific financial exploitation laws aimed at combating undue influence against vulnerable adults (in deathbed situations and beyond) in their criminal codes and/or as part of adult protection rules and regulations.15 These laws differ significantly among jurisdictions, and punishments range from felony convictions in criminal codes to adverse agency findings in rules and regulations. See id. Historically, states often omit caregivers, attorneys-in-fact, and family members from these statutes and rules due to the presumption that family members and fiduciaries will care for the elder notwithstanding research to the contrary. See id. Many states are quickly catching up to enact or amend statues to specifically address the growing problem of financial exploitation of vulnerable adults. Prominent cases of undue influence rising to the criminal level include those of Mark McCay in Texas and Randy Ray Richardson in Oregon. McCay was charged with, and convicted of, attempted theft after he induced an incapacitated 88-year-old woman to sign

• n her death bed a will he had written that benefitted him. McCay’s second will failed

because of a technicality involving witness signatures. More importantly, the Texas Court

• f Appeals found the indictment of attempted theft against McCay was sufficient even

10 Id. (AL, AK, AZ, AR, CA, DE, FL, GA, HI, ID, IL, KS, MA, MI, MS, MO, NM, OK, SD, TN, VT, WV). 11 See generally Jane A. Black, The Not-So-Golden Years: Power of Attorney, Elder Abuse, and Why Our Laws Are Failing

A Vulnerable Population, 82 St. John's L. Rev. 289 (2008).

12 See id. at 291. 13 See e.g., In re Carother's Estate, 150 A. 585, 586 (Pa. 1930); Estate of Hamilton v. Morris, 67 S.W.3d 786, 795 (Tenn. Ct.

• App. 2001).

14 Ross & Reed, supra, § 9:9. 15 Hansen, Kevin E.; Hampel, Jonathan; Reynolds, Sandra L.; and Freeman, Iris C. (2016) "Criminal and Adult Protection

Financial Exploitation Laws in the United States: How Do the Statutes Measure Up to Existing Research?," Mitchell Hamline Law Review: Vol. 42 : Iss. 3, Article 3.

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though the State did not plead lack of testamentary capacity or undue influence.16 The court reasoned, “These terms [of “testamentary capacity” and “undue influence”] . . . are rooted in the civil law and are meaningful in probate proceedings. In a criminal proceeding, the State can prove the accused attempted to appropriate property unlawfully in many ways. One of those ways is by proving the owner did not give effective consent.” Similarly, Richardson was convicted by a trial court for first-degree aggravated theft and obtaining execution of a document by deception in another death-bed will signing.17 However, the Oregon Court of Appeals reversed Richardson’s conviction because of a hearsay error committed by the lower court.18 D. Relationship Between Capacity and Undue Influence Historically, the notion of undue influence emphasized the concept of coercion, whereas subversion of will seems a more appropriate term.19 Subversion allows for a continuum of influence depending on the extent of cognitive impairment.20 The lower the capacity or cognitive status of an individual, the less influence would be required to determine that the individual was incapable or unduly influenced.21 Conversely, an individual with only mild impairment of cognitive function would have to be subjected to a higher level of influence to the point of coercion before that influence would be considered undue.22 Judges seem to have a static definition of what acts constitute undue influence. But the acts constituting undue influence are largely dependent

• n an individual’s capacity.

II. DISPUTED TRANSFER OF AN INCAPACITATED OR ELDERLY RELATIVE CASE STUDY: Granny-Snatching. Bill and Betty Smith were a married couple, both physicians, who accumulated some wealth and were well liked and respected in the community. They had philanthropic goals, in addition to securing a comfortable life for themselves and future for their three children, Edith, Edward, and

• Eldon. In adulthood, Edith and Eldon became physicians themselves. Edward and Eldon moved

from Minnesota to other states. Edith stayed in Minnesota. After Bill died, Betty remained active in her financial affairs and community groups. However, her health was declining, and her executive function was decreasing, although she was not yet diagnosed with a cognitive

• impairment. Edith was Betty’s attorney-in-fact and health care agent. Edith spent many days and

nights with Betty, who wanted to remain independent, but eventually Betty acknowledged that she

16 McCay v. State, No. 05-12-01199-CR, 2015 WL 5247081, at *3 (Tex. App. Sept. 9, 2015), petition for discretionary review

filed (Oct. 2, 2015).

17 State v. Richardson, 288 P.3d 995, 996 (2012). 18 Id. at 75, 998. 19 Shulman, et. al. Assessment of Testamentary Capacity and Vulnerability to Undue Influence. Am. J. Psychiatry 164:5, May

2007.

20 Id. 21 Id. 22 Id.

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needed more help than Edith, who was raising her own family in addition to her medical practice, could provide. Betty moved into a nearby assisted living home and was happy and safe. Knowing Betty was safe, Edith took a hiking trip out of the country in a remote area where she had no cell phone service for days at a time. While Edith was gone, Edward went to Betty’s home, had Betty sign a new power of attorney designating himself as the attorney in fact, revoking Edith’s POA and health care agent designation, and took Betty from her assisted living home to visit his family in Idaho. By this time, Betty was using a walker and her mobility was limited. But Edward did not seem to notice and even left Minnesota without Betty’s walker. After several days, Edward took Betty to Eldon’s home in Illinois, where Eldon had conveniently secured a room at a nursing home connected to the hospital at which he was employed. As part of her admission into the nursing home, she was assessed and diagnosed with severe to moderate dementia. When Edith got back and discovered her mother had been snatched by her brothers, she immediately filed a guardianship action in a Minnesota court – Betty’s home state. After lengthy acrimonious litigation, the judge found that Edward and Eldon did not handle the situation right. However, because Betty had been diagnosed with dementia and was now settled in Illinois, it would not be in her best interests to be moved back to Minnesota. A. The Hardship of Clandestine Transfers The end of an elder’s life is difficult for families to manage, and conflicts may arise among the elder’s loved ones. Sometimes, these relationships may be so tumultuous that one of these people may actually induce the elder to leave their residence in one state to come join the person in another state without the knowledge of the others. This inducement to move, pejoratively termed “granny-snatching,” makes determining jurisdiction for guardianships difficult, expensive, and sometimes even harmful to the elder where the snatcher aims to financially exploit the elder, often further resulting in abuse or neglect as well. B. Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act 1. Jurisdictional Priorities and Notice Enacted in 46 states,23 the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act (UAGPPJA) establishes jurisdiction priorities for guardianship proceedings.24 The home state, which is defined as the state in which the elder “was physically present, including any period of temporary absence, for at least six consecutive months immediately before the filing of a petition for a protective order

• r the appointment of a guardian,” has primary jurisdiction to appoint a guardian.25

The Act also allows a home state to be found, in the alternative, where the elder has been present for a six-month period that ends within six months of the filing of such

23 States that have not enacted the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act include Florida,

Kansas, Michigan, and Texas. Uniform Law Commission, Adult Guardianship and Protective Proceedings Jurisdiction Act Summary (last visited April 28, 2020).

24 See Unif. Adult Guardianship & Protective Proceedings Jurisdiction Act § 203 (2011) [hereinafter UAGPPJA]. 25 Id. § 203(1).

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petition.26 If the elder has no home state, then the state with which the elder has a “significant connection” is selected.27 In addition to requiring more than “mere physical presence,” the finding of a significant connection depends on four factors under the UAGPPJA: (1) the location of the respondent's family and other persons required to be notified of the guardianship or protective proceeding; (2) the length of time the respondent at any time was physically present in the state and the duration of any absence; (3) the location of the respondent's property; and (4) the extent to which the respondent has ties to the state such as voting registration, state or local tax return filing, vehicle registration, driver's license, social relationship, and receipt of services.28 In Woestman v. Russell, the Arizona Court of Appeals provided a quick analysis on “home state” and “significant connection.”29 The court determined that the protected person had no home state where he had “claimed to be from Montana, provided police addresses in three different states, and [had] a criminal history involving offenses in six different states.”30 As such, Arizona was found to be a significant-connection state because the protected person had been involved in a car accident, retained an attorney, and has family that maintains residence there.31 That is, pursuant to Arizona’s UAGPPJA, Arizona was found to have jurisdiction for a conservatorship proceeding as a significant connection state.32 Note that a guardianship may still be sought in a significant-connection state when the elder does have a home state.33 However, the significant-connection state will have jurisdiction only where a guardianship petition has not been filed in the home state prior to or during the significant-connection state’s proceeding and no

• bjection to the significant-connection state’s jurisdiction has been filed. Indeed,

the jurisdiction of the significant-connection state is further checked by section 206’s “appropriate forum” safeguards, which allow the significant-connection state to consider, among other factors, “whether abuse, neglect, or exploitation of the respondent has occurred or is likely to occur and which state could best protect the respondent from the abuse, neglect, or exploitation” and “the length of time the respondent was physically present in or was a legal resident of this or another state.”34

26 Id § 201 (a)(2).. 27 Id. § 203 (2)(A). 28 Id. § 201(b)(1)-(4). 29 Woestman v. Russell, 356 P.3d 319, 321 (Ariz. Ct. App. 2015). 30 Id. 31 Id. 32 Id. 33 Id. § 203(2)(B). 34 Id. §§ 203(2)(B)(iii), 206(c).

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Likewise, any court may pick up jurisdiction, if deemed appropriate, where it has been declined by the home state and/or the significant-connection state.35 Section 204 also provides a safety valve to possible jurisdiction problems by allowing “special jurisdiction” to courts without section 203 jurisdiction specifically for provisional or temporary orders. Section 208 further protects the jurisdiction of the home state by requiring notice if a petition was brought in a non-home-state to “those persons who would be entitled to notice of the petition if a proceeding were brought in the [elder’s] home state.” Note that once jurisdiction is established, that court has “exclusive and continuing” jurisdiction until the court terminates the proceeding.36 2. Transferring Jurisdiction or Enforcing Original Guardianship Order When Travel is Not Clandestine Relatedly, article 3 provides for the transfer of jurisdictions that would terminate jurisdiction in one state in favor of another.37 Again, notice is required when the petition for transfer is filed with the original state.38 The court then determines whether: (1) the protected person is physically present in or is reasonably expected to move permanently to the other state, or the protected person has a significant connection to the other state considering the factors in Section 201(b); (2) an objection to the transfer has not been made or, if an objection has been made, the objector has not established that the transfer would be contrary to the interests of the protected person; and (3) adequate arrangements will be made for management of the protected person's property.39 If these factors are present, then the court issues a provisional order granting the transfer to the state while directing the guardian to petition the other state to accept the original guardianship.40 The petition to the other state is also accompanied by notice to entitled persons.41 Generally, the other state will grant a provisional order accepting the guardianship as long as there is no objection and the guardian is eligible to serve as such in that state.42 The original state terminates the guardianship only after receiving a

35 Id. § 203(3). 36 Id. § 205. 37 See id. §§ 205, cmt.; 301. 38 Id. § 301(b). 39 Id. § 301(d). 40 Id. § 301(e). 41 Id. § 302(b). 42 Id. § 302(d); see also Sears v. Hampton, 143 So. 3d 151, 157 (Ala. 2013) (concluding that the accepting court is only to

decide whether the provisional order from the transferring court is to be accepted, not to appoint a new or different guardian).

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provisional order and necessary documentation from the accepting court.43 The accepting state, likewise, issues a final order after receiving the order for termination from the original court.44 From there, within ninety days, the accepting state can modify the guardianship as necessary to conform with state laws.45 Indeed, this process can apply even when the accepting state has not adopted the UAGPPJA.46 Where a transfer is inappropriate, article 4 provides for registration of a foreign guardianship upon petition and notice from the guardian.47 Registration gives the guardian the power to enforce the guardianship and the powers it grants in a state without jurisdiction.48 C. Possible Loopholes and Outcomes While the UAGPPJA’s adoption has been nearly universal, the handful of states that have not adopted it remain as loopholes that could continue to perpetuate “granny-snatching.” The protections of UAGPPJA do not apply in states where the Act has not been enacted.49 However, even in these states, the traditional analysis of jurisdiction may nonetheless maintain personal jurisdiction where the snatching takes place after a petition in the non- adoptee-state has been filed.50 At Chestnut Cambronne, we were successful in establishing jurisdiction in Minnesota, where the elder had been domiciled, even though she had been taken to Michigan—a non-adoptee state. III. REPRESENTING A CLIENT WHOSE CAPACITY APPEARS TO BE DIMINISHED CASE STUDY: CASE STUDY: Am I Too Late to do a Will?

• Mrs. Neusbaum is a very old client of yours that you have known for more than two decades and

you last updated her Will and other estate planning documents about ten years ago. Mrs. Neusbaum is a widow with no living children, but has all of her life been close to her two nieces and was leaving her entire estate to her two nieces.

• Mrs. Neusbaum comes into your office with her home health aide, Matilda, who Mrs. Neusbaum

promptly introduces to you as the daughter she never had and in whom she now has complete trust.

• Mrs. Neusbaum goes on to announce that she wants to update all of her estate planning documents,

leaving everything to Matilda, who smiles sweetly throughout the whole process. Concerned, you ask to speak to Mrs. Neusbaum alone and she says no, I want my Matilda with me, and I want her to be present during all our discussions. Based on your experience, you have

43 Id. § 301(f). 44 Id. § 302(e). 45 Id. § 302(f). 46 In re Guardianship of Louise D., 3 N.Y.S.3d 918, 919–20 (N.Y. Sur. 2015) (approving transfer to non-adoptee-state Florida

from New York where the above process had been followed and the appropriate factors found).

47 UAGPPJA § 401. 48 See id. § 403(a). 49 Brittany Griffin Smith, Note, Granny Snatching and Personal Jurisdiction—An Argument for A New Federal Interpleader,

100 Ky. L.J. 411, 412–13 (2012).

50 See In re Guardianship of Graham, 963 So. 2d 275, 279 (Fla. Dist. Ct. App. 2007).

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very significant concerns both relative to capacity, and more importantly, the relationship of capacity and undue influence. You consider the following:

• 1. Drafting Mrs. Neusbaum a new will with the concern she might go elsewhere,
• 2. Refusing to draft the will,
• 3. Insisting meeting with Mrs. Neusbaum alone,
• 4. Scheduling a time for Mrs. Neusbaum to come back to your office and calling her nieces, or
• 5. Calling Adult Protection.

A. Option 1: Draft the Will MRPC Rule 1.2 states, “A lawyer shall abide by a client’s decisions concerning the

• bjectives of representation and, as required by Rule 1.4, shall consult with the client as to

the means by which they are to be pursued. B. Option 2: Decline to Draft the Will 1. Clients with Diminished Capacity MRPC 1.14 provides as follows: (a) When a client's capacity to make adequately considered decisions in connection with a representation is diminished, whether because of minority, mental impairment or for some other reason, the lawyer shall, as far as reasonably possible, maintain a normal client-lawyer relationship with the client. 2. Assessing the Client’s Capacity MRPC 1.14, Comment 6: “In determining the extent of the client's diminished capacity, the lawyer should consider and balance such factors as: 1) the client's ability to articulate reasoning leading to a decision; 2) variability of state of mind and ability to appreciate consequences of a decision; the substantive fairness of a decision; and 3) the consistency of a decision with the known long-term commitments and values of the client. 4) In appropriate circumstances, the lawyer may seek guidance from an appropriate diagnostician.” 3. Does the Client Have the Capacity to Enter into the Desired Transaction? Differing transactions have differing levels of capacity (e.g., testamentary capacity

• vs. capacity to contract.) Additionally, difference states have difference capacity

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requirements for execution similar documents. For example, in Georgia, “A person has capacity to create an inter vivos trust to the extent that such person has legal capacity to transfer title to property inter vivos.”51 However, in Minnesota, “Capacity to establish a revocable trust is that of testamentary capacity,”52 which requires the settlor “understand the nature, situation, and extent of his property and the claims of others on his bounty or his remembrance.”53 The client must have capacity at the time the transaction is entered into. Even a client who has been placed under a guardianship may retain some capacity – e.g., testamentary capacity (“lucid interval”). 4. Lawyer’s Duty to Assess Capacity 1. In re Hughes Revocable Trust, 2005 WL 2327095 (Mich. App. 2005): The attorney had “a responsibility to assess his client’s mental capacity.” Lawyer in this case had been told that the testator was often confused. When he met with the testator and her husband, the husband did all the

• talking. The court criticized the attorney for making no attempt to

determine the testator’s capacity. 2. San Diego Op. 1990-3 (1990): “A lawyer must be satisfied that the client is competent to make a will and is not acting as a result of fraud or undue influence…. The attorney should schedule an extended interview with the client without any interested parties present and keep a detailed and complete record of the interview. 3. Logotheti v. Gordon, 414 Mass. 308, 607 N.E.2d 1015 (1993): “An attorney

• wes to a client, or a potential client, for whom the drafting of a will is

contemplated, a duty to be reasonably alert to indications that the client is incompetent or is subject to undue influence and, where indicated, to make reasonable inquiry and a reasonable determination in that regard. An attorney should not prepare or process a will unless the attorney reasonably believes the testator is competent and free from undue influence.” 4. Norton v. Norton, 672 A.2d 53 (Del. 1996) (dicta): Lawyer who drafted the will did not meet with the testator until the day he came to the hospital to present her with a document drafted at the direction of one of the testator’s children that left her estate primarily to that child. “Although the question

• f testamentary capacity was not the principal focus of this appeal, we take

the occasion to emphasize the importance for a lawyer who drafts a will, particularly for an aged or infirm testator, to be satisfied concerning competence and to make certain that the instrument as drafted represents the intentions of the testator…. [D]irect communication which precedes drafting of the instrument should be the norm if the lawyer is to discharge his obligation of assessing testamentary competence.”

51 Ga. Code Ann., §53-12-23. 52 Minn. Stat. § 501C.0601. 53 Matter of Congdon’s Estate, 309 N.W.2d 261, 266-67 (Minn. 1981).

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5. Steps to Maximize or Enhance the Client’s Capacity 1. Multiple short meetings: ask the same questions and look for consistency. 2. Time of day (“Sundowner’s Syndrome”). 3. Bright lighting and minimum background noise and interruptions. 4. Speak clearly while facing client. 5. Speak slowly and give client plenty of time to think before expecting a response: don’t finish the client’s sentences for him or her. 6. Avoid using legal terms without explaining them. 7. Draw diagrams. 8. Use larger font in documents. 9. Offer the client alternatives to the client’s desired course of action: ask the client to reiterate those alternatives to you and why she has or has not chosen

• ne.

10. Allow clients ample time to review documents, both in advance and in the lawyer’s office. 11. Meet at client’s home or facility in which client is residing. 12. Without disclosing confidential information, consult with family members

• r caregivers as to how best to communicate with the client; when is best

time to talk with client; how medications affect client, etc. C. Option 3: Insist on Meeting Alone Although Mr. Wormer has already stated he wants his son to be present during all conversations, contact him following the meeting to insist he come into the office alone or

• ffer to meet at him at his house when his son is not present.

D. Options 4 and 5: Contacting Family Members or Adult Protection 1. Confidentiality MRPC 1.6 provides as follows: (a) A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b). MRPC 1.14 provides as follows: (b) When the lawyer reasonably believes that the client has diminished capacity, is at risk of substantial physical, financial or other harm unless action is taken and cannot adequately act in the client's own interest, the lawyer may take reasonably necessary protective action, including consulting with individuals or entities that have the ability to take action to protect the client and, in appropriate cases, seeking the appointment of a guardian ad litem, conservator or guardian.

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(c) Information relating to the representation of a client with diminished capacity is protected by Rule 1.6. When taking protective action pursuant to paragraph (b), the lawyer is impliedly authorized under Rule 1.6(a) to reveal information about the client, but only to the extent reasonably necessary to protect the client's interests. 2. Lawyer’s Duty to Take Protective Action ABA Legal Formal Ethics Opinion 96-404 (examining an earlier version of MRPC 1.14): “A client who is making decisions that the lawyer considers to be ill-considered is not necessarily unable to act in his own interest, and the lawyer should not seek protective action merely to protect the client from what the lawyer believes are errors in judgment.” “Although not expressly dictated by the Model Rules, the principle of respecting the client's autonomy dictates that the action taken by a lawyer who believes the client can no longer adequately act in his or her own interest should be the action that is reasonably viewed as the least restrictive action under the circumstances.” “The nature of the relationship and the representation are relevant considerations in determining what is the least restrictive action to protect the client's interests. Even where the appointment of a guardian is the only appropriate alternative, that course, too, has degrees of restriction. For instance, if the lawyer-client relationship is limited to a single litigation matter, the least restrictive course for the lawyer might be to seek the appointment only of a guardian ad litem, so that the lawyer will be able to continue the litigation for the client. On the other hand, a lawyer who has a long-standing relationship with a client involving all of the client's legal matters may be more broadly authorized to seek appointment of a general guardian or a guardianship over the client's property, where only such appointment would enable the lawyer to fulfill his continuing responsibilities to the client under all the circumstances of the representation.” IV. KNOW WHO YOUR CLIENT IS CASE STUDY: What Do You Mean I’m Impaired You get a call in the middle of the night from a client whose elderly father was arrested for driving under the influence. Apparently, dad was driving home from an old friend’s house, lost control of the vehicle, left the roadway, and struck a tree. The police found him and arrested him for driving while under the influence. Son also indicates that there is a question as to whether or not dad was impaired as a result of alcohol, or prescription medications, or possibly a combination of both. Son has questions with regard to how to get dad out of jail, and how to defend dad on these charges. Apparently dad has never been in trouble before.

13

Son also has questions about dad’s driver’s license. Dad is elderly and the son has been worried about him for quite some time about whether he should be driving at all. Son inquires as to whether

• r not dad could or should get his license back at this point, irrespective of the alcohol/drug related

charges. A. Elderly Prescription Drug and Alcohol Use Older adults are the largest users of prescription medication, yet with advancing age they are more vulnerable to adverse reactions to the medications they are taking.54 A survey in the United States of a representative sampling of 2206 community-dwelling adults, aged 62 through 85 years, was conducted by in-home interviews and use of medication logs between 2010 and 2011.55 At least one prescription medication was used by 87 percent and 5 or more prescription medications were used by 36 percent of the individuals surveyed.56 Additionally, 35 percent of those surveyed used over-the-counter medications.57 The young-old (ages 66-74) have been found to be more adherent to medication regimens than middle-aged older adults, but after age 75, older adults present decreased comprehension of medication instructions and adherence.58 Living arrangements influence the older person’s ability to manage medications, and older adults who live alone were found to be more prone to medication errors.59 Over recent decades alcohol consumption has increased among those who are older than 65 years.60 Alcohol is more toxic in the aging organism because of changes in its metabolism, distribution and elimination, which lead to central nervous system effects at lower levels of intake; also, aging organs such as brain and liver are more sensitive to the toxicity of alcohol.61 Also, elderly people take more drugs, and ethanol and these drugs may interact; therefore, alcohol consumption can modify serum drug concentrations and their toxicity.62 For these reasons, alcohol should be used in moderation, especially among those of older age.63 B. Statutes Many states have a particular section of the Driving Under the Influence (DUI) code that pertains to driving under the influence of drugs. Typically, the elements of DUI are driving

• r operating a motor vehicle and being under the influence of alcohol or a controlled

substance.

54 Karen Dorman Marek; Lisa Antle. “Patient Safety and Quality: An Evidence-Based Handbook for Nurses.” (2008). 55 Qato DM, Wilder J, Schumm LP, et. al. “Changes in Prescription and Over-the-Counter Medication and Dietary Supplement

Use Among Older Adults in the United States, 2005 vs 2011.” JAMA Intern Med 2016; 176:473.

56 Id. 57 Id. 58 Id. 59 Id. 60 Meier P., Seitz HK. “Age, alcohol metabolism and liver disease.” Curr Opin Clin Nutr Metab Care. 2008 Jan, 11(1):21-6 61 Id. 62 Id. 63 Id.

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Some states have implemented a list of controlled substances within their DUI statutes. For example, under Kentucky Revised Statutes Annotated §189A.010(1)(d): A person shall not operate or be in physical control of a motor vehicle anywhere in this state while the presence of [any Schedule I controlled substance except marijuana, Alprazolam, Amphetamine, Buprenorphine, Butalbital, Carisoprodol, Cocaine, Diazepam, Hydrocodone, Meprobamate, Methadone, Methamphetamine, Oxycodone, Promethazine, Propoxyphene, and Zolpidem] is detected in the blood, as measured by a scientifically reliable test, or tests, taken within two (2) hours of cessation of operation or physical control of a motor vehicle. In many states, the fact that the drug was prescribed by a doctor is not a defense. For example, under California Vehicle Code Section 23630, the fact that any person charged with driving under the influence of any drug or combined influence of alcoholic beverages and any drug in violation of Section 23152 or 23153 is, or has been entitled to use, the drug under the laws of this state shall not constitute a defense against any violation of the sections. C. Case Law Involuntary intoxication is not a defense when someone knowingly takes prescription

• medication. For example, in State v. Kain, Appellant was arrested for DUI after the

arresting officer smelled alcohol and administered a field sobriety test, which Appellant failed.64 Appellant asserted that he had three drinks from 6:30 to about 10:00 pm and that at about 11:15 he took two diet pills.65 Appellant argued that the trial court should have recognized involuntary intoxication as a defense.66 In this regard, Appellant made two claims.67 The first is that the defense of involuntary intoxication is applicable to all criminal prosecutions and is not specifically excluded by the statutes prohibiting driving under the influence.68 Additionally, Appellant argued that even though driving under the influence is interpreted as a strict liability offense, involuntary intoxication can still be asserted as a defense, because, as a general defense, it “operates to relieve criminal culpability irrespective of the presence of intent.”69 The court held that with the law in Tennessee being that driving under the influence of a drug or intoxicant is a strict liability

• ffense,

a defendant whose intoxication results from knowingly ingesting a prescription drug and alcohol cannot avail himself of the involuntary intoxication defense.70 Additionally, toxicologists are not required to prove the degree of impairment or amount

• f drugs present in an individual’s system. For example, in Hoffman v. State, Appellant

was found to have violated his community control because he was driving under the influence.71 Appellant drove into a truck which was parked on the outside lane of the road with its flashers on.72 The arresting officer administered a roadside sobriety test and based

64 See 24S.W.3d 816, 817 (Tenn. Crim. App. 2000). 65 Id. at 818. 66 Id. 67 Id. 68 Id. 69 Id. 70 Id. at 819. 71 See 743 So.2d 130, 131 (4th DCA 1999). 72 Id.

15

• n the facts of the accident, the officer’s observation, and Appellant’s poor performance
• n the sobriety test, the officer arrested Appellant for DUI.73 The breathalyzer indicated

no presence of alcohol, but a urine test reflected the presence of Prozac, Soma, and Xanax, all of which were legally prescribed to Appellant.74 The court found that it was unnecessary for the toxicologist to be able to estimate the degree of impairment or the amount of drugs in the Appellant’s system.75 D. Plan “B,” Take the Keys 1. Warning Signs As they age, some seniors may develop impairments in vision, memory and flexibility that can make driving difficult and unsafe, according to Elizabeth Dugan, associate professor of gerontology at the University of Massachusetts Boston.76 Dugan identified three levels of warning signs to use when assessing an older driver: Level 1: Difficulty getting in or out of the vehicle, difficulty scanning over the steering wheel or shoulder. Level 2: Dents or scratches on the vehicle, multiple near misses in a short time period, getting lost in familiar areas, difficulty navigating basic traffic situations such as merging. Level 3: Multiple crashes, tickets or police warnings in a two-year or shorter time span.77 2. Intervention If a senior is unable to drive safely recommend five levels of increasingly direct intervention: 1. One-on-one meeting: approach the aging driver alone during a quiet time. Be direct and respectful. 2. Two-on-one meeting: Team up with someone the older family member trusts, such as a friend or clergy member. 3. Discuss with professional help: Research and find a neutral professional mediator, such as a social worker or medical professional, to speak with the aging family member. 4. Intervention: Have a professional mediator conduct an intervention involving family members and friends to convince the senior to stop driving and be evaluated by a certified driving rehabilitation specialist.

73 Id. 74 Id. 75 Id. 76 Bukowski, Thomas J. Time to Hand Over the Keys. Family Safety+Health Fall 2012, Vol. 71, No. 3. 77 Id.

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5. Use the law as a last resort: Request a physician or rehabilitation specialist send a letter to the local department of motor vehicles to revoke the person’s driver’s license.78 V. WHAT TO DO WHEN THERE IS NO HEALTH CARE DIRECTIVE CASE STUDY: What Do You Mean I Can’t Make This Decision? Elmer and Gladys are a married couple. For years, Gladys and the three children, Mike, Max, and Cindy, tried to convince Elmer to have a Health Care Directive established, setting forth who can make health care decisions for him if he is unable to do so for himself and information about the type of health care treatment he would want at the end of his life. He absolutely refused to do so, simply saying that his spouse and the children knew his wishes and he saw no point in establishing this document. Gladys dies. Elmer becomes ill and falls into a coma. The care providers take the position that all three of the adult children must unanimously make medical decisions. The oldest child is son Mike. He is a religious fundamentalist, and believes that life should be preserved at all costs. He cites that miracles can happen at any time, so that by sustaining dad’s life, the more opportunity there is for a miracle to happen. The middle child, Max, and the youngest child, Cindy, do not share this view. They believe that dad would have wanted “to be dad” and if he could not be himself, he would want to simply pass away as pain free as possible. He would not want any measures taken to prolong his life. Dad’s life is being maintained by artificial means. A. Health Care Directives Generally In response to various court rulings on the right to refuse life-sustaining treatment, (see, e.g., Cruzan v. Director, Missouri Dep't of Health, 497 U.S. 261 (1990); In re Quinlan, 355 A.2d 647 (NJ 1976), all fifty states (and Washington D.C.) have passed laws providing for advance health care directives (including living wills and health care powers of attorney).79 Each state’s law differs but they are generally consistent in allowing an elder with mental capacity to make his end-of-life care decisions known, documented, and generally enforceable when he or she does become incapacitated.80 These directives also provide immunity from civil wrongful death lawsuits and from ethics boards complaints to doctors who follow them when withdrawing life-sustaining treatment.81 As important as it is to have an advance directive, clients should be aware that there is still a risk that doctors, hospitals and other health care providers may not always follow these

• directives. In Doctors Hospital of Augusta, LLC v. Alicea, a doctor caused a patient to be

hooked up to a ventilator even though the patient’s agent under her health care power of attorney had made it clear that the patient wanted no life-sustaining procedures to be

78 Id. 79 Diana Anderson, CELA, Review of Advance Health Care Directive Laws in the United States, the Portability of Documents,

and the Surrogate Decision Maker When No Document Is Executed, NAELA J., Fall 2012, at 183.

80 Id. 81 Catherine J. Jones, Decisionmaking at the End of Life, 63 Am. Jur. Trials 1, § 27 (2015).

17

• applied. When the agent sued, the trial court granted summary judgment for the doctor and

the hospital.82 The Supreme Court of Georgia reversed the grant of summary judgment. The Supreme Court pointed out that “a clear objective of the Act [that allows health care advance directives] is to ensure that in making decisions about a patient’s health care, it is the will of the patient or her designated agent, and not the will of the health care provider, that controls.” B. Family Decision-Making Statutes Forty-six states statutorily empower select family members to make treatment decisions on behalf of an incapacitated person when no health care directive exists.83 These statutes are called “surrogate decision-making” or “family decision-making” statutes.84 Generally, these “devolved” surrogates must make treatment decisions based on the “substituted judgment” standard, or what the incapacitated person’s probable wishes would be if they could make the decision for themselves.85 Meanwhile, a minority of states require “clear and convincing evidence” ala Cruzan to show the person’s actual wishes.86 For example, Alabama normally requires the substituted judgment standard but requires clear and convincing evidence of the person’s actual desires in cases of withdrawal of life-sustaining treatment.87 Most of these statutes allow a “best interests” standard as a fallback to the substituted judgment standard.88 The tension between surrogate decision-making statutes and health care directives is an important one: the two function as alternatives, not concurrently. In other words, if the incapacitated person has a health care directive, then the family members empowered by a decision-making statute will not have authority to make health care decisions for the incapacitated person. Instead, the power to refuse life-sustaining treatment on behalf of the incapacitated person rests with the person’s selected health care agent.89 In those four states that do not have surrogate decisionmaking statutes, there would be no competing powers

• f consent. However, as stated above, the practitioner should still be aware of their

jurisdiction’s judicial review policies notwithstanding the health care agent’s obvious claim for consent. C. No Directive and No Surrogate Statute Despite the fact that most Americans have definitive plans in mind for the end of their life,

82 299 Ga. 315, 788 S.E.2d 392 (2016), 83 Only Massachusetts, Minnesota, Missouri, and Rhode Island have not enacted surrogate decision-making statutes. ABA

Comm’n L. & Aging. State Health Care Power

• f

Attorney Statutes (September 2019). https://www.americanbar.org/content/dam/aba/administrative/law_aging/2019-sept-default-surrogate-consent-statutes.pdf

84 Aaron N. Krupp, Health Care Surrogate Statutes: Ethics Pitfalls Threaten the Interests of Incompetent Patients, 101 W. Va.

• L. Rev. 99, 108–09 (1998).

85 Charlie Sabatino & Erica Wood, American Bar Association, Surrogate Decision-Making and Advance Directives—Nuts and

Bolts, National Aging and Law Conference (2010).

86 Id. 87 Ala. Code § 22-8A-11(c). 88 See Sabatino & Wood, supra; see also e.g., Fla. Code § 765.205(1)(b). 89 See Aaron N. Krupp, supra, 108–09.

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many have not actually drafted health care directives.90 Additionally, there may be issues with a health care directive being recognized in a state different from the one it was drafted in—or lack of health care directive reciprocity.91 In states without a surrogate decisionmaking statute, the patient without a health care directive (or without an effective

• ne if a reciprocity issue arises) is subject to the same issues Quinlan and Cruzan faced.92

Generally, the court is not involved unless a family member wishes to disrupt the status quo and withdraw life-sustaining treatment (recall that doctors are exposed to liability for withdrawing treatment absent a health care directive, and this liability encourages them to continue treating the patient).93 While courts do generally prefer that these end-of-life decisions be decided by the family and the doctor, a number of jurisdictions require judicial review of either all decisions to withdraw life-sustaining treatment or such decisions under specific circumstances.94 For example, Minnesota and Massachusetts—both states without surrogate decisionmaking statutes—require review of all decisions to withdraw life-sustaining treatment.95 In fact, Massachusetts holds a “substituted judgment” hearing to make this determination.96 In other states, specific circumstances triggering review of the decision to withdraw life-sustaining treatment include pregnancy (In re A.C., 573 A2d 1235 (Dist. Col.

• App. 1990)) and minors (In re E.G., 549 N.E.2d 322 (Ill. 1989)).97

In cases where no surrogate decisionmaking statue operates—as in Minnesota and Massachusetts—cases are often brought by guardians seeking to have health care decision making powers granted to them so that life-sustaining treatment can be withdrawn.98 Indeed, these states generally outline health care decision making standards in their guardianship statues.99

90 See Jones, supra, § 38. 91 See Anderson, supra, at 192–93. 92 See Jones, supra, § 38. 93 See Jones, supra, § 38. 94 Karl A. Menninger, Proof of Basis for Refusal or Discontinuation of Life-Sustaining Treatment on Behalf of Incapacitated

Person, 40 Am. Jur. Proof of Facts 3d 287, § 16 (2015); see also U.S. Congress, Office of Technology Assessment, Life Sustaining Technologies and the Elderly 120–22 (1987).

95 Menninger, supra (citing Superintendent of Belchertown State School v. Saikewicz, 370 N.E.2d 417 (Mass. 1977); In re

Conservatorship of Torres, 357 N.W.2d 332 (Minn. 1984)); see also In re Guardianship of Tschumy, 853 N.W.2d 728, 745 (Minn. 2014).

96 Matter of R.H., 622 N.E.2d 1071, 1076 (Mass. App. Ct. 1993). 97 See Menninger, supra. 98 See, e.g., Saikewicz, 370 N.E.2d at 419, 435 (noting that petitions for the appointment of both a guardian and a guardian ad

litem had been filed and granting authority to make health care decisions to guardian ad litem); Tschumy, 853 N.W.2d at 745 (finding guardian could have such authority); Matter of Quinlan, 355 A.2d 647, 651 (N.J. 1976) (appointing guardian but allocating authority to the joint decision making power of the guardian, family, and the physician under the oversight of the hospital ethics committee).

99 Mass. Gen. Laws ch. 190B, § 5-309(a) (substituted judgment followed by best interest standard); Minn. Stat. Ann. § 524.5-

313(4)(i) (modified substituted judgment standard); Neb. Rev. Stat. § 30-2628(a)(3) (“intent of the ward expressed prior to incompetency”); N.J. Stat. § 3B:12-56(d) (“consistent with the wishes of the ward” followed by best interests standard); R.I.

• Gen. Laws § 33-15-29 (best interests standard); Vt. Stat. tit. 14, § 3069 (“The wishes, values, beliefs, and preferences of the

person under guardianship shall be respected to the greatest possible extent in the exercise of all guardianship powers.”). Note that New Hampshire does not define the health care decisionmaking authority of guardians by statute. American Bar Association Commission on Law and Aging, Health Care Decision-Making Authority: What is the Decision-Making Standard? (2015) To understand standards by which guardians, health care agents, and surrogates are held across states, see generally id.

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As a result, in states without family surrogate statutes, the appointment of a guardian (or guardian ad litem) may be necessary to assert the withdrawal of life-sustaining treatment absent a health care directive. Again, judicial review standards vary greatly by state, so practitioners are encouraged to weigh the financial and emotional costs of attempting to withdraw life-sustaining treatment. Additionally, as noted by the differing results of Quinlan, Tschumy, and Saikewicz, states also vary in what authority a guardian (or a guardian ad litem) has in the decisionmaking process, careful attention must be paid to the state’s developed law. Note also that the determination of state law and the interpretation

• f statutes in relation to the common law is also diverse among states as some choose to

provide that statutes are cumulative of common law so that the elder may avail themselves

• f the protections provided by both statute and common law; other states make no mention
• f this cumulative nature.100 Therefore, careful analysis is necessary to ensure that the right

appointment is sought and that client expectations can be appropriately managed. VI. UNAUTHORIZED PRACTICE OF LAW CASE STUDY: “I’m from the Bank and I’m here to Help You.” Sam Smiley is considered the most helpful banker at Helpful Bank Corporation. Helpful Bank Corporation strives to put its customers first, going the extra mile for each and every customer. Agnes Jones has been a longtime customer of Helpful Bank. She was recently visiting with Sam Smiley, and Sam was telling her about one of his other customers, a family where mom died, leaving her assets to her children, but requiring a probate procedure. The seemingly happy children soon engaged in, as Sam described it “trickery, treachery, and moral turpitude,” with the result that each child was pitted against each other. As a result, the children do not speak to each other and the relationships are beyond repair; in Sam’s words, all because of probate. Upon hearing this story, Agnes wanted to know what can be done to avoid probate. Sam suggested that she establish all of her accounts at her bank as joint tenants with rights of survivorship with her daughter, Michelle, and for her CDs that were already in place, establish the accounts as payable on death designation naming Michelle as the sole beneficiary. The reason for treating the CDs this way is as Sam said, looking out for Agnes’s apparent best interest, she would not then have to cash in the CDs and pay the “substantial penalty for early withdrawal.” What was not known to Sam, not that it makes any difference, is that Agnes has long ago established a Will. The Will names her three daughters to receive her assets in equal shares, Lisa, Michelle, and Marisa. But Sam did offer up one bit of legal advice, although he said Agnes should not quote him: he said that “it’s far better to set up assets in joint ownership arrangements and payable on death designations, since there is a much lower legal standard to meet, than the higher standard to do a Will.” But again, he said “don’t quote him on that.” A. Unauthorized Practice of Law Generally speaking, the unauthorized practice of law includes the following activities: 1) preparing legal documents, including deeds, mortgages, leases, trust instruments, wills, etc.; 2) interpreting or expressing legal advice and opinions; 3) preparing or trying cases in

100 See Jones, supra, § 38 n.99.

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front of a court or judge; 4) rendering a service that requires the use of legal knowledge or skill; or 5) using the titles of “lawyer,” “attorney,” or “esquire.” Given the multifaceted work financial advisers do with clients every day, it could be easy to unintentionally cross into areas outside the bound of their profession.101 For example, an adviser who is retained to assist with financial planning during a divorce may have to contend with areas such as insurance policies, retirement planning, taxes, and other things that might arise.102 Despite their responsibility to give clients options, however, advisers must be careful not to deviate into legal advice and opinion. 103 Certified Public Accountants (CPAs) have to be even more careful, since they are afforded a special exception when it comes to their practice.104 Treasury Circular 230 gives CPAs the authority to represent clients before the IRS, allowing them to analyze and interpret how tax laws apply to clients and consult with their clients about their interpretations of the law.105 CPAs need to be wary that their legal advice only extends to tax law and not

• ther areas such as estate planning.106

B. SEC Regulatory Notice 17-11 On February 5, 2018, FINRA adopted Rule 2165 (Financial Exploitation of Specified Adults) and amended FINRA Rule 4512.107 1. FINRA Rule 4512 The amendment to Rule 4512 requires advisers to make a reasonable effort to obtain the name and contact information of a trusted contact person. If the adviser believes their client is victim of financial exploitation they can contact the trusted person: (a) Each member shall maintain the following information: (1) for each account: (A) customer's name and residence; (B) whether customer is of legal age; (C) name(s) of the associated person(s), if any, responsible for the account, and if multiple individuals are assigned responsibility for the account, a record indicating the scope

• f their responsibilities with respect to the account, provided,

however, that this requirement shall not apply to an institutional account;

101 Cordel, Joseph. Financial Adviser. “Toeing the Line.” December 2014. 102 Id. 103 Id. 104 Id. 105 Id. 106 Id. 107 Regulatory Notice 17-11. Financial Industry Regulation Authority. March 30, 2017.

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(D) signature of the partner, officer or manager denoting that the account has been accepted in accordance with the member's policies and procedures for acceptance of accounts; (E) if the customer is a corporation, partnership or other legal entity, the names of any persons authorized to transact business on behalf of the entity; and (F) subject to Supplementary Material .06, name of and contact information for a trusted contact person age 18 or older who may be contacted about the customer's account; provided, however, that this requirement shall not apply to an institutional account. 2. FINRA Rule 2165 Rule 2165 allows, but does not require, advisers to place a temporary hold on a disbursement of funds if they reasonably believe someone over the age of 65 is the victim of financial exploitation. The adviser is required to notify the contact person within two days of the temporary hold unless they believe this person is involved in the financial exploitation. (a) Definitions (1) For purposes of this Rule, the term “Specified Adult” shall mean: (A) a natural person age 65 and older; or (B) a natural person age 18 and older who the member reasonably believes has a mental or physical impairment that renders the individual unable to protect his

• r her own interests.

(2) For purposes of this Rule, the term “Account” shall mean any account of a member for which a Specified Adult has the authority to transact business. (3) For purposes of this Rule, the term “Trusted Contact Person” shall mean the person who may be contacted about the Specified Adult's Account in accordance with Rule 4512. (4) For purposes of this Rule, the term “financial exploitation” means: (A) the wrongful

• r

unauthorized taking, withholding, appropriation, or use of a Specified Adult's funds or securities; or (B) any act or omission by a person, including through the use

• f a power of attorney, guardianship, or any other authority

regarding a Specified Adult, to:

22

(i)

• btain control, through deception, intimidation or

undue influence, over the Specified Adult's money, assets or property; or (ii) convert the Specified Adult's money, assets or property. (b) Temporary Hold on Disbursements (1) A member may place a temporary hold on a disbursement of funds

• r securities from the Account of a Specified Adult if:

(A) The member reasonably believes that financial exploitation

• f the Specified Adult has occurred, is occurring, has been

attempted, or will be attempted; and (B) The member, not later than two business days after the date that the member first placed the temporary hold on the disbursement of funds or securities, provides notification

• rally or in writing, which may be electronic, of the

temporary hold and the reason for the temporary hold to: (i) all parties authorized to transact business on the Account, unless a party is unavailable or the member reasonably believes that the party has engaged, is engaged, or will engage in the financial exploitation

• f the Specified Adult; and

(ii) the Trusted Contact Person(s), unless the Trusted Contact Person is unavailable or the member reasonably believes that the Trusted Contact Person(s) has engaged, is engaged, or will engage in the financial exploitation of the Specified Adult; and (C) The member immediately initiates an internal review of the facts and circumstances that caused the member to reasonably believe that the financial exploitation of the Specified Adult has occurred, is occurring, has been attempted, or will be attempted. (2) The temporary hold authorized by this Rule will expire not later than 15 business days after the date that the member first placed the temporary hold on the disbursement of funds or securities, unless

• therwise terminated or extended by a state regulator or agency of

competent jurisdiction or a court of competent jurisdiction, or extended pursuant to paragraph (b)(3) of this Rule. (3) Provided that the member's internal review of the facts and circumstances under paragraph (b)(1)(C) of this Rule supports the

23

member's reasonable belief that the financial exploitation of the Specified Adult has occurred, is occurring, has been attempted, or will be attempted, the temporary hold authorized by this Rule may be extended by the member for no longer than 10 business days following the date authorized by paragraph (b)(2) of this Rule, unless otherwise terminated or extended by a state regulator or agency of competent jurisdiction or a court of competent jurisdiction. (c) Supervision (1) In addition to the general supervisory and recordkeeping requirements

• f

Rules 3110, 3120, 3130, 3150, and Rule 4510 Series, a member relying on this Rule shall establish and maintain written supervisory procedures reasonably designed to achieve compliance with this Rule, including, but not limited to, procedures related to the identification, escalation and reporting of matters related to the financial exploitation of Specified Adults. (2) A member's written supervisory procedures also shall identify the title of each person authorized to place, terminate or extend a temporary hold on behalf of the member pursuant to this Rule. Any such person shall be an associated person of the member who serves in a supervisory, compliance or legal capacity for the member. (d) Record Retention Members shall retain records related to compliance with this Rule, which shall be readily available to FINRA, upon request. The retained records shall include records of: (1) request(s) for disbursement that may constitute financial exploitation of a Specified Adult and the resulting temporary hold; (2) the finding of a reasonable belief that financial exploitation has

• ccurred, is occurring, has been attempted, or will be attempted underlying

the decision to place a temporary hold on a disbursement; (3) the name and title of the associated person that authorized the temporary hold on a disbursement; (4) notification(s) to the relevant parties pursuant to paragraph (b)(1)(B) of this Rule; and (5) the internal review of the facts and circumstances pursuant to paragraph (b)(1)(C) of this Rule. VII. CLIENT JUST DIED OR IS INCAPACITATED; FAMILY MEMBERS OR CAREGIVERS ARE EMPTYING THE HOUSE CASE STUDY: It Must Be Mine Because I Have It. In late September, Gordon’s three children, Charlie, Adam, and Fulton, moved Gordon into a nursing home facility. Because Charlie and Adam were from out of town the three children agreed they would clean out Gordon’s house over Thanksgiving, so they could get the house on the market to help pay for his care.

24

When Charlie and Adam arrive at the house, they see it has been completely emptied of all furniture and contents. When confronted, Fulton stated he earned the property for taking care of Gordon over the past five years. The end of life for an elder can put family members, caregivers, and agents at odds with each other. Sometimes, these disagreements—even when well-intentioned—give rise to caregivers or family members emptying the house of the incapacitated or deceased elder. Notwithstanding the emotional pain family members may experience, this emptying can be tantamount to financial exploitation of the elder and probably necessitates the seeking of guardianship/conservatorship108 to restore the items to the house or the elder’s estate. A. Legitimate Emptying Remember that the emptying of the house may be appropriate in some circumstances. Generally, executors (or personal representatives) of estates are required to preserve the estate for distribution.109 In other words, theoretically, a representative emptying a house in order to provide for the safekeeping of the items in it could fall within this duty. For living elders, similar authority is conferred to guardians.110 Further, an attorney-in- fact may also be authorized by the elder to manage and care for property such that emptying the house would be justified under the power of attorney agreement.111 In short, some instances of emptying the house by these agents may be legitimate efforts to preserve the property by protecting it from vandalism or other dangers. B. Illegitimate Emptying However, there are significant issues when the family member bearing the authority to legitimately empty a house is not the one emptying the house. Indeed, the absence of authority by any family member to take possession of the property (i.e., the elder has become incapacitated and has no power of attorney agreement) does not justify the removal

• f this property as the property still belongs to the elder. Nonetheless, it is a common
• ccurrence.

1. Criminal and Administrative Penalties Just as undue influence can be shoehorned into theft as an “unlawful taking of property of another,” so too can the removal of property from an elder’s home.112 Beyond this, as stated in section one, the removal of property may also fall under the definition of financial exploitation if the incapacitated adult falls under the appropriate statutory definition. For example, Illinois defines financial exploitation

108 As terminology differs among states, “guardianship” will be used to convey control over the incapacitated person’s property. 109 Paul M. Coltoff et al., Duties and Liabilities of Representative in General, 34 C.J.S. Executors and Administrators § 274

(2015); see, e.g., In re Estate of Skelly, 725 N.Y.S.2d 666, 668 (N.Y. App. Div. 2001) (finding representative had not preserved the estate where his delay in probating the will resulted in vandalism and damage to property); In re Padezanin, 937 A.2d 475, 481 (Pa. Super. Ct. 2007) (citing Pa. Cons. Stat. § 3311) (providing that a representative may take possession of even real estate).

110 See, e.g., Colo. Rev. Stat. § 15-14-401(1)(a); Mass. Gen. Laws Ann. ch. 190B, § 5-423(a)(1); Mo. Stat. Ann. § 475.130(1). 111 See John A. Borron, Durable Power of Attorney, 3 Mo. Prac., Probate Forms Manual, Form 6.1 (2d ed. 2015). 112 See, e.g., In re Michael C., No. F047924, 2005 WL 3471797, at *1 (Cal. Ct. App. Dec. 20, 2005) (finding theft conviction

appropriate where grandson had taken knife from his grandmother’s residence).

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as the “misappropriation of the assets or resources of an elderly person or a person with a disability contrary to law, including . . . misappropriation of assets or resources by . . . conversion.”113 Meanwhile, other states, like Alabama, vaguely determine “financial exploitation” in their criminal codes based on the value of “property taken.”114 A majority of states have statutes that criminalize financial exploitation.115 Likewise, a majority

• f states have adult protective services laws providing civil penalties where there

was an “illegal, attempted illegal, or unlawful use of a vulnerable adult’s property, assets, or funds” or where such illegal conduct was an “immoral” use of the elder’s assets.116 The exact definitions and penalties among states vary, but the general theme is that these financial exploitation statutes (whether criminal or civil) are broad enough to include removal of property from the home, even where the definition of theft might fall short. 2. Guardianship Proceedings Because guardians are required to protect and preserve property of an incapacitated individual, a concerned family member should consider petitioning for guardianship of the elder when such “self-help” occurs. Because theft can happen quickly, emergency guardianship may be more appropriate.117 This quick action can stop the exploitation from occurring by granting a concerned family member the authority to take possession of the property. Lastly, as a reminder, financial exploitation is often carried out by guardians or those with authority. In other words, the emptying of the house by the attorney-in- fact, the guardian, or the personal representative may in fact be illegitimate. In this instance, a petition to remove the guardian would be appropriate.118 When that removal occurs, the original guardian is required to transfer the property in his care

• ver to the new guardian.119 In short, these guardianship proceedings, together with

the above criminal and administrative proceedings, can help stop the illegitimate removal of property and possibly even reverse it. C. Statute of Frauds Many individuals who steal property from an elder’s home state that the elder promised he

• r she could have the property as payment for helping the elder over the years.

There are other obstacles in the path to recovering for these services. One who claims against an estate for personal services has the burden of proving the existence of an express

• r implied contract and must substantiate the claim with clear and convincing

113 755 Ill. Comp. Stat. § 5/2-6.2. 114 See Ala. Code § 13A-6-195(a). 115 See Hansen et al., supra. 116 Id. 117 See, e.g., Ky. Rev. Stat. § 387.740(1) (authorizing an emergency appointment of a guardian or conservator where “it appears

that there is danger of . . . damage or dissipation to his property if immediate action is not taken.”).

118 Fla. Stat. § 744.474(1)(c) (providing removal is appropriate where guardian has abused his power). 119 See, e.g., Fla. Prob. Rules, R. 5.660(c).

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evidence.120 Another difficult obstacle is that services performed by relatives are presumed to have been furnished as a gift so that no recovery can be obtained in the absence of proof

• f a contract to pay some particular price or the reasonable value of the services.121

The Statute of Frauds requires that certain agreements be in writing to be enforceable. Under Section 2-514 of the Uniform Probate Code, “A contract to make a will or devise,

• r not to revoke a will or devise, or to die intestate, if executed after the effective date of

this [article], may be established only by (i) provisions of a will stating material provisions

• f the contract, (ii) an express reference in a will to a contract and extrinsic evidence

proving the terms of the contract, or (iii) a writing signed by the decedent evidencing the contract.”

• VIII. TRUSTEE SUED BY TRUST BENEFICIARIES

CASE STUDY: But I Was Abiding By the Trust Terms. William and Mary were married in 1959. William had four children and Mary had three. William adopted Mary's children. Together, they had twin sons, Timothy and Patrick. William was a successful businessman and investor and accumulated a substantial fortune. William created a Trust and made his son, Timothy, the trustee. William was the beneficiary during his lifetime. The remainder beneficiaries were Mary, who was entitled to the benefits of the trust during her lifetime, and then the nine children, who would share equally in what remained after both William and Mary were deceased. The trust document provided that during William's lifetime, the Trustee shall distribute to William the net income and principal as William directs and in the event of incapacity as the trustee deemed appropriate to support William’s “accustomed manner of living.” William invested $4 million into a company his son, Patrick, founded. William’s shares of the corporation were titled into the trust. William died shortly after and the investment went badly, and the trust's interest in the company was worth very little. Four of William's children sued Timothy in his capacity as trustee of the trust for breach of his fiduciary duties. They alleged that Timothy had squandered William's life savings for his and Patrick's benefit, depriving the other seven children of their benefits from the trust. A. Lawyers Representing Trustees and Other Fiduciaries 1. Who is the Client? a. Majority view: Lawyer represents ONLY the fiduciary (1) State Statutes:

120 In re Busse's Estate, 332 Ill. App. 258, 75 N.E.2d 36 (2d Dist. 1947). See § 135.12. 121 McConathy v. McConathy, 314 Ill. App. 377, 41 N.E.2d 335 (3d Dist. 1942).

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South Carolina Stat. § 62-1-109. Duties and obligations of lawyer arising out of relationship between lawyer and person serving as a fiduciary. “Unless expressly provided otherwise in a written employment agreement, the creation of an attorney-client relationship between a lawyer and a person serving as a fiduciary shall not impose upon the lawyer any duties or

• bligations to other persons interested in the estate, trust

estate, or other fiduciary property, even though fiduciary funds may be used to compensate the lawyer for legal services rendered to the fiduciary. This section is intended to be declaratory of the common law and governs relationships in existence between lawyers and persons serving as fiduciaries as well as such relationships hereafter created.” See also New Hampshire Rev. Stat. Ann. §§ 564-B:2-205 (trusts) and 556:31 (wills) (attorney-client privilege applies to communications between the fiduciary and the lawyer for the fiduciary); Ohio Rev. Code § 5815.16 (2007); Nev. Rev. Stat. Ann. § 162.310 (2015) (“An attorney who represents a fiduciary does not, solely as a result of such attorney-client relationship, assume a corresponding duty of care or other fiduciary duty to a principal.” “Principal” is “any person to whom a fiduciary as such owes an

• bligation.”)

(2) Bar Opinion ABA Formal Opinion 94-380: Lawyer for the fiduciary only represents the fiduciary. Lawyer must maintain confidentiality and may not disclose breaches of duty by the fiduciary. “The fact that the fiduciary has obligations to the beneficiaries of the trust or estate does not in itself either expand or limit the lawyer's

• bligations to the fiduciary client under the Model Rules, nor

impose on the lawyer obligations toward the beneficiaries that the lawyer would not have toward other third parties.” (3) State Cases: See, e.g., Goldberg v. Frey, 217 Cal. App. 3d 1258 (Cal. Ct. App. 1990), Linth v. Gay, 190 Wash.. App. 331, 360 P.3d 844 (Wash. Ct.

• App. 2015) (quoting Trask v. Butler, 872 P.2d 1080 (Wash. 1994):

“[A] duty is not owed from an attorney hired by the personal representative of an estate to the estate or the estate beneficiaries.”); Roberts v. Feary, 986 P.2d 690 (Or. Ct. App. 1999), Hill v. Boatright, 890 P.2d 180 (Colo. App. 1994): Attorney-client relationship existed between personal representative of the estate

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and the lawyer she hired, and the attorney has no liability to a third party absent fraud or malice. b. Minority View: Lawyers may owe duties to the beneficiaries of the fiduciary relationship (1)

• Fla. A.G. Op. 96-94 (1996): “… [A]s the ward is the intended

beneficiary of the guardianship, an attorney who represents a guardian of a person adjudicated incapacitated and who is compensated from the ward's estate for such services owes a duty of care to the ward as well as to the guardian.” (2) Torian’s Estate v. Smith, 564 S.W,2d 561 (Ark. 1978) (quoting Francis v. Turner, 67 S.W.2d 211, 212 (Ark. 1933) (overruled on

• ther grounds) (“[A]n attorney for an estate represents the heirs and

distributees and legatees to the extent that it becomes his duty, where the value of the estate is material to those interested in dealing between themselves or others, not only to refrain from making any misrepresentation or concealment, but to also fully disclose the value of the estate and its probable assets so that all interested may exercise an informed judgment,” the Torian’s Estate court held that the attorney-client privilege did not apply to conversations between the estate’s attorney and the executor because the executor and the beneficiaries were “joint clients” of the attorney. (3) Morales v. Field, Degoff, Huppert & Macgowan, 99 Cal. App.3d 307, 160 Cal. Rptr. 239, 244 (Cal. Ct. App. 1979): “An attorney who acts as counsel for a trustee provides advice and guidance as to how that trustee may and must act to fulfill his obligations to all

• beneficiaries. It follows that when an attorney undertakes a

relationship as adviser to a trustee, he in reality also assumes a relationship with the beneficiary akin to that between trustee and beneficiary.” (4) Charleson v. Hardesty, 839 P.2d 1303, 1306-07 (Nev. 1992): “We agree with the California courts that when an attorney represents a trustee in his or her capacity as trustee, that attorney assumes a duty

• f care and fiduciary duties toward the beneficiaries as a matter of

law.” (But see, Nev. Rev. Stat. Ann. § 162.310, enacted in 2015 to

• verturn this holding).

(5) Elam v. Hyatt Legal Services, 541 NE.2d 616, 618 (Ohio 1989): “A beneficiary whose interest in an estate is vested is in privity with the fiduciary of the estate, and where such privity exists the attorney for the fiduciary is not immune from liability to the vested beneficiary for damages arising from the attorney's negligent performance.” (6) Branham v. Stewart, 307 S.W.3d 94 (Ky. 2010): Lawyer represented guardian of a minor child who dissipated the child’s

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• funds. When sued for malpractice by the child, the lawyer argued

that there was no privity because his client was the guardian, not the minor child. The court disagreed: “The attorney retained by an individual in the capacity as a minor's next friend or guardian establishes an attorney-client relationship with the minor and owes the same professional duties to the minor that the attorney would

• we to any other client.” The court distinguished the guardian-

minor relationship from other fiduciary relationships (such as executor-beneficiaries and trustee-beneficiaries) in which there might be multiple beneficiaries with multiple interests who are capable of watching out for their own interests. See also, In re the Guardianship of Karan, 38 P.3d 396 (Wash. Ct. App. 2002). (7) Biakanja v. Irving, 320 P.2d 16 (Cal. 1958): This decision established a frequently used balancing test used to determine whether a lawyer is liable to an individual who is not in privity of contract with the lawyer. The elements of the test include: i. The foreseeability of harm to the plaintiff; ii. Whether the plaintiff in fact suffered harm; iii. The closeness of the connection between the negligent act and the harm; iv. The public policy in preventing future harm. (8) Fickett v. Superior Court of Pima County, AZ, 558 P.2d 988, 990 (Ariz. Ct. App. 1976): Applying the Biakanja test: “We are of the

• pinion that when an attorney undertakes to represent the guardian
• f an incompetent, he assumes a relationship not only with the

guardian but also with the ward. If, as is contended here, petitioners knew or should have known that the guardian was acting adversely to his ward's interests, the possibility of frustrating the whole purpose of the guardianship became foreseeable as did the possibility of injury to the ward. In fact, we conceive that the ward's interests overshadow those of the guardian.” 2. Representing a Trustee Who Is Accused of Breaching Fiduciary Duty a. Privilege (1) Some courts recognize a “fiduciary exception” to the attorney-client privilege under the theory that the beneficiary is the “real client”: Riggs National Bank of Washington, D.C. v. Zimmer, 355 A.2d 709, 713–14 (Del. Ch. 1976): Trustee asked his lawyer to prepare a legal opinion memorandum about a pending petition for instructions in anticipation of potential tax litigation. A year later, the beneficiaries filed a surcharge claim against the trustee and requested a copy of the memorandum. The trustee and lawyer refused to deliver the memorandum, citing attorney-client privilege.

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“As a representative for the beneficiaries of the trust which he is administering, the trustee is not the real client in the sense that he is personally being served. And, the beneficiaries are not simply incidental beneficiaries who chance to gain from the professional services rendered. The very intention of the communication is to aid the beneficiaries. The trustees here cannot subordinate the fiduciary

• bligations owed to the beneficiaries to their own private interests

under the guise of attorney-client privilege. The policy of preserving the full disclosure necessary in the trustee-beneficiary relationship is here ultimately more important than the protection of the trustees' confidence in the attorney for the trust…The fiduciary obligations

• wed by the attorney at the time he prepared the memorandum were

to the beneficiaries as well as to the trustees. In effect, the beneficiaries were the clients of Mr. Workman as much as the trustees were, and perhaps more so.” (2) Other states resolutely refuse to recognize this exception: See, e.g., Wells Fargo Bank v. Superior Court, 990 P.2d 591 (Cal. 2000). (3) Even if the fiduciary exception is applied (and note that it is not recognized in many states), consultations between the lawyer and the client pertaining solely to a lawsuit against the fiduciary remain protected. b. Is the Lawyer Liable when the Client Breaches Fiduciary Duty? Restatement of the Law Governing Lawyers, § 51(4) provides that a lawyer

• wes a duty of care to certain “nonclients” if: 1) the lawyer is representing

a trustee, guardian, executor or other fiduciary; 2) “the lawyer knows that appropriate action by the lawyer is necessary with respect to a matter within the scope of the representation to prevent or rectify the breach of a fiduciary duty owed by the client to the nonclient, where (i) the breach is a crime or fraud or (ii) the lawyer has assisted or is assisting the breach;” 3) “the nonclient is not reasonably able to protect its own rights;” and 4) the duty “would not significantly impair the performance of the lawyer’s obligations to the client.” In an example given in the comment to this Section, a lawyer for a trustee is liable to the beneficiaries if the lawyer knows that the trustee is going to embezzle the trust funds and “takes no steps to prevent or rectify the consequences, for example by warning Beneficiary or informing the court to which Client as trustee must make an annual accounting.” Pederson v. Barnes, 139 P2d 552 (Alaska 2006): Lawyer represented a man who was his niece’s guardian. One year into the guardianship, the niece’s therapist wrote the court that there were indications that the guardian was spending the niece’s money on himself. The guardian told the lawyer that his high standard of living was due to investments made by an investment company that eventually was proved to be a sham. The guardian was convicted to theft and, in a civil action, the lawyer was charged with 40%

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• f the damages caused to the guardianship estate. The appellate court

adopted the approach of the Restatement § 51(4) and upheld the denial of summary judgment to the lawyer. The appellate court interpreted the language of element #2 not as requiring that the lawyer have actual knowledge but as meaning that “the lawyer knows or has reason to know” that action is necessary. The court stated that there was ample evidence that the lawyer had “reason to know” of the thefts given the “incredibly high” rates of return on the purported investments, the suspicious appearance of the account statements that the lawyer had received from the sham investment company, and the fact that, according to a supplemental report filed by the lawyer for the guardian, the guardian had “forgotten” to report

• ne asset of the estate that comprised one-half of the guardianship funds.

c. Continuing Representation When the Fiduciary is Sued: Conflict of Interest? Cincinnati Bar Ass’n v. Robertson, Slip Op. No, 2016-Ohio-654: Executor retained lawyer to represent her as Executor of her father’s estate. Other beneficiaries sued to remove her, and lawyer agreed to represent her

• individually. Lawyer failed to explain to executor the potential for a conflict
• f interest. “Specifically, the board found that “[t]o the extent the claims of

the Lewallen’s [sic] other family members implicate[d] potential wrongdoing that would diminish the estate, Respondent [could] not simultaneously discharge his duty of undivided loyalty to the estate while undertaking a similar duty to the alleged wrongdoer.” Accordingly, the parties stipulated and the board found that Robertson’s dual representation

• f Lewallen in her individual capacity and in her role as fiduciary of the

estate violated Prof. Cond. R. 1.7(b) (prohibiting a lawyer from accepting

• r continuing representation of a client if a conflict of interest would be

created, unless the affected client gives informed consent in writing).” B. Uniform Trust Code §802: Duty of Loyalty (a) A trustee shall administer the trust solely in the interests of the beneficiaries. (b) …a transaction involving the investment or management of trust property entered into by the trustee for the trustee’s own personal account or which is otherwise affected by a conflict between the trustee’s fiduciary and personal interests is voidable by a beneficiary affected by the transaction unless: (1) the transaction was authorized by the terms of the trust; (3) the beneficiary did not commence a judicial proceeding within the time allowed by Section 1005 (one year); (c) A transaction involving the investment or management of trust property is presumed to be affected by a conflict between personal and fiduciary interests if it is entered into by the trustee with:

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(2) the trustee’s descendants, siblings, parents, or their spouses; (4) a corporation or other person or enterprise in which the trustee, or a person that owns a significant interest in the trustee, has an interest that might affect the trustee’s best judgment. C. Uniform Trust Code §803: Impartiality If a trust has two or more beneficiaries, the trustee shall act impartially in investing, managing, and distributing the trust property, giving due regard to the beneficiaries’ respective interests. D. Uniform Trust Code §804: Prudent Administration A trustee shall administer the trust as a prudent person would, by considering the purposes, terms, distributional requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution. E. Uniform Trust Code §813: Duty to Inform and Report (a) A trustee shall keep the qualified beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests. Unless unreasonable under the circumstances, a trustee shall promptly respond to a beneficiary’s request for information related to the administration of the trust. (b) A trustee: (1) upon request of a beneficiary, shall promptly furnish to the beneficiary a copy of the trust instrument; (2) within 60 days after accepting a trusteeship, shall notify the qualified beneficiaries of the acceptance and of the trustee’s name, address, and telephone number; (3) within 60 days after the date the trustee acquires knowledge of the creation

• f an irrevocable trust, or the date the trustee acquires knowledge that a

formerly revocable trust has become irrevocable, whether by the death of the settlor or otherwise, shall notify the qualified beneficiaries of the trust’s existence, of the identity of the settlor or settlors, of the right to request a copy of the trust instrument, and of the right to a trustee’s report as provided in subsection (c); and (4) shall notify the qualified beneficiaries in advance of any change in the method or rate of the trustee’s compensation. (c) A trustee shall send to the distributees or permissible distributees of trust income

• r principal, and to other qualified or nonqualified beneficiaries who request it, at

least annually and at the termination of the trust, a report of the trust property,

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liabilities, receipts, and disbursements, including the source and amount of the trustee’s compensation, a listing of the trust assets and, if feasible, their respective market values. Upon a vacancy in a trusteeship, unless a cotrustee remains in

• ffice, a report must be sent to the qualified beneficiaries by the former trustee. A

personal representative, [conservator], or [guardian] may send the qualified beneficiaries a report on behalf of a deceased or incapacitated trustee. (d) A beneficiary may waive the right to a trustee’s report or other information

• therwise required to be furnished under this section. A beneficiary, with respect

to future reports and other information, may withdraw a waiver previously given. (e) Subsections (b)(2) and (3) do not apply to a trustee who accepts a trusteeship before [the effective date of this [Code]], to an irrevocable trust created before [the effective date of this [Code]], or to a revocable trust that becomes irrevocable before [the effective date of this [Code]]. F. Uniform Trust Code §1001: Remedies for Breach of Trust (a) A violation by a trustee of a duty the trustee owes to a beneficiary is a breach of trust. (b) To remedy a breach of trust that has occurred or may occur, the court may: (1) compel the trustee to perform the trustee’s duties; (2) enjoin the trustee from committing a breach of trust; (3) compel the trustee to redress a breach of trust by paying money, restoring property, or other means; (4)

• rder a trustee to account;

(5) appoint a special fiduciary to take possession of the trust property and administer the trust; (6) suspend the trustee; (7) remove the trustee as provided in Section 706; (8) reduce or deny compensation to the trustee; (9) subject to Section 1012, void an act of the trustee, impose a lien or a constructive trust on trust property, or trace trust property wrongfully disposed of and recover the property or its proceeds; or (10)

• rder any other appropriate relief.

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G. Uniform Trust Code §1002: Damages for Breach of Trust (a) A trustee who commits a breach of trust is liable to the beneficiaries affected for the greater of: (1) the amount required to restore the value of the trust property and trust distributions to what they would have been had the breach not occurred; or (2) the profit the trustee made by reason of the breach. (b) Except as otherwise provided in this subsection, if more than one trustee is liable to the beneficiaries for a breach of trust, a trustee is entitled to contribution from the other trustee or trustees. A trustee is not entitled to contribution if the trustee was substantially more at fault than another trustee or if the trustee committed the breach of trust in bad faith or with reckless indifference to the purposes of the trust

• r the interests of the beneficiaries. A trustee who received a benefit from the

breach of trust is not entitled to contribution from another trustee to the extent of the benefit received. H. Uniform Trust Code §1006: Reliance on Trust Instrument A trustee who acts in reasonable reliance on the terms of the trust as expressed in the trust instrument is not liable to a beneficiary for a breach of trust to the extent the breach resulted from the reliance. IX. EXECUTING DOCUMENTS - COVID-19 CASE STUDY: Help! I Am Trapped in My Senior Living Facility and I Can’t Get Out to Make a Will. Mabel V. Anderson (and never ever write her name without her middle initial “V” because it stands for her favorite flower, Violet) has been living in her senior facility for five years. Mabel is a very social person, enjoying all the activities the facility has to offer, including the group bus ride to the casino every Monday and Thursday morning. She enjoys socializing with the other residents, particularly the dinners, movies, and card games. In the past, the conversation at the card games invariably turned to estate planning. Mabel always meant to update her Will (it was last done years ago when her children were young, and her husband was still living). She also knows when the occasional attorney came to provide a presentation on estate planning, the attorney talked about the importance of a financial power of attorney and a health care directive document as well. At these seminars, Mabel took copious notes and was quite engaged, always asking the question about how much does everything cost. On top of that, she particularly enjoyed the sugar cookies that were served at the presentations. With the onset of the Covid-19 pandemic, the senior health care facility took appropriate action. There would be no more group bus rides to the casino. Mabel, like all of the other residents, was asked to shelter in place in her room. Meals would be brought to her. There would be no gathering

35

for movies or playing cards. And of course, there would be no attorneys showing up on occasion to present information on estate planning. Because of these measures, Mabel’s anxiety grew quite high, fearing that she may contract the virus, and may die, without completing her estate plan. She therefore wants to get her estate plan completed as quickly as possible. She reaches out to the first attorney she can find, her friend’s cousin’s spouse, once removed, who is a criminal defense attorney. The criminal defense attorney says that she does not practice in this area, but she refers Mabel to a friend who does practice in the area of trusts and estates. This attorney, named Joan, is very sympathetic to Mabel’s situation, wants to help Mabel as quickly as possible, but because no visitors are allowed to the senior living facility, Joan faces the problem of how best to have Mabel execute documents. A. Best Practice vs. Statutory Requirements. It is best practice to execute documents in the presence of two disinterested witnesses and a notary. However, many states continue to have some form of stay at home or social distancing order in place, making it difficult for clients, especially elderly clients to sign documents according to best practice. Therefore, it is important to review state statutes to confirm the statutory requirements to ensure each document is valid. For example, in Minnesota it is best practice to execute a Will in the presence of two disinterested witnesses and a notary. However, in Minnesota (prior to the enactment of a temporary harmless error statute) to be valid, a Will must be executed in the presence of two witnesses. If a document is executed in accordance with state law, but not in accordance with best practice, I recommend taking extra steps to decrease the likelihood of the litigation regarding the validity of the document. First, if it is not possible for the attorney to be physically present during the execution, the attorney should be communicating with the client, via telephone or video conference, during the execution. Second, the attorney should prepare a memorandum to the file outlining the circumstances surrounding the execution and evidencing the client’s capacity. Finally, when possible, the attorney should schedule a meeting for the client to come into his or her office to execute the documents according to best practice. B. Remote Ink-signed Notarization (RIN) and Remote Online Notarization (RON) Review state law to determine whether documents may be executed remotely according to best practice standards. Even though remote notarization may be authorized under state statute, it is important to confirm estate planning documents may be executed using remote

• notarization. For example, Minnesota Statutes Section 358.645 authorizes remote
• notarization. However, Minnesota Statutes Section

During the COVID-19 pandemic, several states issued temporary authorizations permitting Notaries to perform notarial acts on paper documents using video conference technology,

36

a process Fannie Mae has labeled "remote ink-signed notarization" (RIN), not to be confused with remote online notarization (RON).122 In general, RINs use solutions such as GoToMeeting, Microsoft Teams, WebEx, or Zoom to satisfy the requirement that a document signer personally appear before a Notary.123 Paper documents are signed in pen and ink and faxed or transmitted electronically between the signer and Notary.124 RONs, by contrast, use a dedicated platform that integrates in one system a video conference capability, multi-factor methods for verifying the identity of the signer that uniquely apply to remote online notarizations, and an electronic signing room that presents the electronic document in real time for signing using electronic signatures by the document signer and Notary.125 Many of the steps to perform a RIN in the temporary orders and authorizations are generally based on the New York executive order and are described below:

• The Notary and signer appear before each other using a live, real-time video

conference solution such as WebEx, GoToMeeting or Microsoft Teams.

• The Notary identifies the signer using the methods allowed under current

Notary law.

• The signer signs the document and faxes or transmits electronically the

signed document to the Notary during the video conference.

• The Notary prints out the document received from the signer and completes

the notarial certificate in pen and ink during the video conference.

• The Notary faxes or transmits electronically the notarized document back

to the signer during the video conference.126 The New York order and several other state authorizations also allow the signer to physically mail the originally signed paper document to the Notary within a certain number

• f days of the RIN.127 When the Notary receives the document from the signer in the mail,

the Notary is authorized to notarize that document using the date of the original RIN and mail it back to the signer.128 X. ATTORNEY AIDER AND ABETTOR LIABILITY A growing trend in the last twenty years has been to find an attorney liable for aiding and abetting a breach of fiduciary duty.129

122 Anderson, Bill. “10 Standards of Practice For Remote Ink-Signed Notarizations.” National Notary Association. April 16,

2020.

123 Id. 124 Id. 125 Id. 126 Id. 127 Id. 128 Id. 129 Katerina P. Lewinbuk. “Let’s Sue all the Lawyers: The Rise of Claims Against Lawyers for Aiding and Abetting a Client’s

Breach of Fiduciary Duty.” 40 Ariz. St. L.J. 135 (2008). States recognizing a cause of action against attorneys for aiding and abetting the breach of fiduciary duty include, among others: Colorado, see, e.g., Alexander v. Anstine, 152 P.3d 497, 503 (Colo. 2007); Illinois, see, e.g., Hefferman v. Bass, 467 F.3d 596, 601 (7th Cir. 2006); Minnesota, see, e.g., Witzman v. Lehrman, Lehrman & Flom, 601 N.W.2d 179, 188 (Minn. 1999); New Jersey, see, e.g., Morganroth & Morganroth v. Norris, McLaughlin

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The critical distinction between a regular legal malpractice claim and a claim against an attorney for aiding and abetting his or her client's breach of fiduciary duty is that “there need be no allegation that the attorney actually owed the plaintiff a direct duty of care.” 130 Because such claims do not require the attorney owe a duty to the plaintiff, motions to dismiss or motions for summary judgment based on the absence of a duty to the plaintiff are not useful and will likely fail.131 But see Anstine v. Alexander, 128 P.3d 249, 255 (Colo. Ct. App. 2005) (“A claim for legal malpractice requires proof of damages incurred by the plaintiff client and caused by the negligence

• f an attorney who owes a duty of care to the client.” (citing Temple Hoyne Buell Found. v.

Holland & Hart, 851 P.2d 192, 198 (Colo. Ct. App. 1992))), rev'd, 152 P.3d 497 (Colo. 2007). Case Study: “If a tree falls in a forest and no one is around to hear it…”

• Mr. and Mrs. Neusbaum engage attorney in asset protection planning. As part of the plan Mr. and
• Mrs. Neusbaum decide to transfer their homestead property to their three children as tenants in

common reserving a life estate interest. The deed is not recorded, but is delivered to the children to ensure the transfer is complete for Medical Assistance purposes. After delivery the deed is stored in attorney’s vault. Eight years later Mr. and Mrs. Neusbaum’s daughter predeceases them and her estate is insolvent

• wing $75,000 in back taxes. Attorney represents Mr. and Mrs. Neusbaum as personal

representative of their daughter’s estate. Attorney informs Mr. and Mrs. Neusbaum that daughter’s remainder interest in their property is valued at $100,000 and the IRS and state Department of Revenue will likely file a lien on the property once the deed is recorded. Mr. and Mrs. Neusbaum ask what will happen if the deed is destroyed. Attorney explains that the IRS and state Department

• f Revenue are unlikely to discover the estate owned an interest in the property.

Is the attorney liable if he or she destroys the original deed? Is the attorney obligated to record the deed? Is the attorney liable if he or she delivers the original deed to Mr. and Mrs. Neusbaum knowing they will destroy the original deed? A. Restatements of the Law. a. Restatement (Third) of the Law Governing Lawyers. A lawyer who counsels a client to engage in conduct that violates the rights of a third person is subject to liability to the third person to the extent stated in §§ 51 and 56-57.132

& Marcus, 331 F.3d 406, 415 (3d Cir. 2003); New York, see, e.g., Weingarten v. Warren, 753 F. Supp. 491, 495-96 (S.D.N.Y. 1990); Oregon, see, e.g., Reynolds v. Schrock, 142 P.3d 1062, 1065-67 (Or. 2006); and South Dakota, see, e.g., Chem-Age

• Indus. v. Glover, 2002 SD 122, 652 N.W.2d 756, 774.

130 David Grossbaum, Partner, Hinshaw & Culbertson LLP, Conspiring to Commit or Aiding and Abetting a Client's Breach

• f Fiduciary Duty: Defending Such Claims Against Attorneys, Presentation at Hinshaw's 2006 Legal Malpractice & Risk

Management Conference, at 3 (Mar. 2, 2006).

131 Id. 132 Restatement (Third) of the Law Governing Lawyers § 94.

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Section 56 states, “In addition to liability under §§ 48-55, a lawyer is subject to liability to a client or nonclient when the nonlawyer would be in similar circumstances.” Section 51(4) states “a lawyer owes a duty of care to certain “nonclients” if: (a) the lawyer is representing a trustee, guardian, executor or other fiduciary; (b) the lawyer knows that appropriate action by the lawyer is necessary with respect to a matter within the scope of the representation to prevent or rectify the breach of a fiduciary duty owed by the client to the nonclient, where: (i) the breach is a crime or fraud or (ii) the lawyer has assisted or is assisting the breach; (c) the nonclient is not reasonably able to protect its own rights; and (d) the duty “would not significantly impair the performance of the lawyer’s obligations to the client.” ACTEC Commentaries: Illustration 5: Lawyer represents Client in Client’s capacity as trustee of an express trust for the benefit of Beneficiary. Client tells Lawyer that Client proposes to transfer trust funds into Client’s own account, in circumstances that would constitute embezzlement. Lawyer informs Client that the transfer would be criminal, but Client nevertheless makes the transfer, as Lawyer then knows. Lawyer takes no steps to prevent or rectify the consequences, for example by warning Beneficiary or informing the court to which Client as trustee must make an annual

• accounting. The jurisdiction’s professional rules do not forbid such disclosures (see

§67 [Using or Disclosing Information to Prevent, Rectify, or Mitigate Substantial Financial Loss]). Client likewise makes no disclosure. The funds are lost, to the harm of Beneficiary. Lawyer is subject to liability to Beneficiary under [Restatement (Third) of the Law Governing Lawyers § 51]. Illustration 6: Same facts as in Illustration 5, except that Client asserts to Lawyer that the account to which Client proposes to transfer trust funds is the trust’s

• account. Even though Lawyer could have exercised diligence and thereby

discovered this to be false, Lawyer does not do so. Lawyer is not liable to the harmed Beneficiary. Lawyer did not owe Beneficiary a duty to use care because Lawyer did not know (although further investigation would have revealed) that appropriate action was necessary to prevent a breach of fiduciary duty by Client. Illustration 7: Same facts as in Illustration 5, except that Client proposes to invest trust funds in a way that would be unlawful, but would not constitute a crime or fraud under applicable law. Lawyer’s services are not used in consummating the

39

• investment. Lawyer does nothing to discourage the investment. Lawyer is not

subject to liability to Beneficiary. b. Restatement (Second) of Torts. One standing in a fiduciary relation with another is subject to liability to the other for harm resulting from a breach of duty imposed by the relation.133 An individual is liable for harm resulting to a third party from the tortious conduct

• f another if he [or she]: (1) does a tortious act in concert with the other or pursuant

to a common design with him or her, or (2) knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself [or herself].134 A person who knowingly assists a fiduciary in committing a breach of trust is himself [or herself] guilty of tortious conduct and is subject to liability for the harm thereby caused.135 B. Elements. There is no uniform standard for establishing civil liability for aiding and abetting because courts across the country disagree on the applicable test and analysis, as well as on the actual elements of the tort.136 While the elements necessary to qualify for this relatively new cause of action vary by jurisdiction, they generally consist of the following: (1) the presence of a fiduciary duty

• wed by the attorney’s client to a nonclient third party, (2) breach of that fiduciary duty by

the attorney’s client, (3) the attorney’s fiduciary knowledge, and (4) substantial assistance provided by the attorney to his or her client in propagating the breach.137 1. Existence of fiduciary duty. The threshold requirement in virtually all jurisdictions is for the plaintiff to demonstrate that defendant attorney's client owed a fiduciary duty to the plaintiff.138 Whether the facts of a particular case support the existence of a fiduciary duty is a question of law.139

133 Restatement (Second) of Torts § 874. 134 Restatement (Second) of Torts § 876(a)-(b). 135 Restatement (Second) of Torts § 874 cmt. c. 136 Katerina P. Lewinbuk. “Let’s Sue all the Lawyers: The Rise of Claims Against Lawyers for Aiding and Abetting a

Client’s Breach of Fiduciary Duty.” 40 Ariz. St. L.J. 135 (2008).

137 Brinkley Rowe. “See no Fiduciary, Hear No Fiduciary: A Lawyer’s Knowledge Within Aiding and Abetting Fiduciary

Breach Claims. 85 Fordham L. Rev. 1389.

138 See, e.g., Weingarten, 753 F. Supp. at 495; Witzman, 601 N.W.2d at 187; Chem-Age Indus., 2002 SD 122, 652 N.W.2d at

774 (all first addressing whether there was an initial duty owed by the client before determining whether attorney could be held liable).

139 Reynolds, 107 P.3d at 55.

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2. Breach of fiduciary duty. The plaintiff can establish the existence of a fiduciary duty between himself or herself and the defendant attorney's client, he or she then needs to prove that the client breached that duty.140 This issue usually comes down to a factual determination of whether a breach of fiduciary duty actually took place. 3. Attorney’s fiduciary knowledge. State courts differ as to the required degree of knowledge that an attorney must have of (1) the fiduciary relationship between his or her client and the nonclient injured party and (2) breach by her client of their fiduciary duty as a result of her legal advice.141 a. Constructive Knowledge. In 1999, in Witzman v. Lehrman, Lehrman & Flom,142 Joyce Witzman, a beneficiary of three trusts brought a claim against the accounting firm, Lehrman, Lehrman & Flom (“LLF”), for aiding and abetting fiduciary

• breach. The Minnesota Supreme Court accepted that, “in cases where the

primary tortfeasor's conduct is clearly tortious or illegal, some courts have held that a defendant with a long-term or in-depth relationship with that tortfeasor may be deemed to have constructive knowledge that the conduct was indeed tortious.” However, the court went on to say, “where the conduct is not a facial breach of duty, courts have been reluctant to impose liability on an alleged aider and abettor for anything less than actual knowledge that the primary tortfeasor's conduct was wrongful.” Ultimately, the court affirmed the lower court’s grant for a motion for summary judgment for failure to show the other elements. Three years later, in Chem-Age Industries, Inc. v. Glover,143 two investors in a corporation brought fraud, conversion, legal malpractice, and breach of fiduciary duty actions against the attorney who prepared the incorporation documents on behalf of long-time client, Byron Dahl. Dahl had

140 Courts in Colorado, Illinois, Minnesota, New Jersey, New York, Oregon, and South Dakota have stated that a breach of

fiduciary duty between plaintiff and attorney's client is required to establish attorney liability for aiding and abetting her client's breach of fiduciary duty. See Anstine v. Alexander, 128 P.3d 249, 255 (Colo. Ct. App. 2005) (“A cause of action for aiding and abetting a breach of fiduciary duty requires (1) breach by a fiduciary of a duty owed to a plaintiff ....”), rev'd 152 P.3d 497 (Colo. 2007); Hefferman, 2005 U.S. Dist. LEXIS 7414, at *9 (“In Illinois, to state a claim for aiding and abetting, ... a plaintiff must allege: (1) the party whom the defendant aids must perform a wrongful act which causes an injury ....”); Witzman, 601 N.W.2d at 187 (“A claim for aiding and abetting the tortious conduct of another has three basic elements: (1) the primary tort- feasor must commit a tort that causes an injury to the plaintiff ....”); Briarpatch Ltd. v. Geisler Roberdeau, Inc., No. 99 Civ. 9623, 2002 U.S. Dist. LEXIS 20789, at *19 (S.D.N.Y. 2002) (“Under New York law, aiding and abetting breach of fiduciary duty requires plaintiffs to prove: (1) the existence of a violation committed by the primary (as opposed to the aiding and abetting) party ....”)), aff'd in part, vacated in part, 373 F.3d 296 (2d Cir. 2004); Chem-Age Indus., 2002 SD 122, 652 N.W.2d at 775 (“To establish a cause of action for aiding or assisting in the breach of a fiduciary duty, a plaintiff must prove that: (1) the fiduciary breached an obligation to plaintiff ....”).

141 Brinkley Rowe. “See no Fiduciary, Hear No Fiduciary: A Lawyer’s Knowledge Within Aiding and Abetting Fiduciary

Breach Claims. 85 Fordham L. Rev. 1389.

142 601 N.W.2d 179 (Minn. 1999). 143 652 N.W.2d at 775.

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accumulated large balances on the company's credit cards for what appeared to be personal items, including charges for “Bailey's 750 ml”; and “Food & Beverage at the Princess Tower Hotel, Freeport, Bahamas.” The complaint alleged the attorney breached his fiduciary duty to the investors under the Restatement (Second) of Torts § 876(b). The Supreme Court held that a genuine issue of material fact existed as to whether the attorney substantially assisted his former client in breaching a fiduciary duty to investors, thus precluding summary judgment for attorney in aiding and abetting in the breach of a fiduciary duty action. b. Actual Knowledge. In Hefferman v. Bass,144 the Seventh Circuit Court articulated that Hefferman's allegation of Bass’ knowledge was sufficient by pleading that “Bass' participation in St. Pierre's ... breach of fiduciary duty was knowing and intentional.” In its analysis of an aiding and abetting claim in In re Ticketplanet.com, 145 the court invoked pleading standards under Federal Rule of Civil Procedure 9(b) as a corollary to the aiding and abetting knowledge standard under New York law: “[t]o pass muster under Rule 9(b) ‘a complaint must allege with some specificity the acts [at the core of the claim,] ... conclusory allegations ... are not enough.”’ Applying this standard to the degree of knowledge that Golub & Golub had of their alleged participation in fiduciary breach through their status as Debtor's attorneys, the court held that “the allegations

• f the [trustee's] complaint are insufficient to state a claim against the law

firm, whether stated as an aiding and abetting claim or otherwise, and they are dismissed.” The subtext provided by the court seems to indicate a rejection of sufficient knowledge showings on the sole basis of the close ties between Mandell, TPAC, and the Debtor itself. This division between Delaware's and Illinois's actual knowledge standard and a constructive knowledge basis for satisfying the doctrine's third element represents a key conflict among jurisdictions that have accepted the aiding and abetting cause of action. The prudent practitioner should conduct himself/herself in such a manner to assume that the ‘should have known’ standard is likely to be applied more widely in the future and will be used in hindsight to evaluate the practitioner’s acts and omissions.

144 467 F.3d 596. 145 313 B.R. 46 (Bankr. S.D.N.Y. 2004).

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4. Substantial assistance in breach of fiduciary duty. All states that reviewed the issue, except of Colorado,146 require the attorney substantially assisted in his or her client's breach of the fiduciary duty.147 To prove a lawyer “substantially assisted” his or her client, the plaintiff must show the lawyer engaged in affirmative conduct148 in terms of his or her participation in the breach of a fiduciary duty, rather than merely rendering legal services to his or her client who committed the breach.149 For example, providing specific advice to the client as to the necessary steps for breaching a fiduciary duty he or she owes to the plaintiff, as well as drafting certain documents to assist with the same may constitute evidence of a lawyer's substantial assistance.150More specifically, “substantial assistance” in this context “means something more than the provision of routine professional services”151 and “[m]erely acting as a scrivener for a client is insufficient.”152 5. Actual damages. Certain states, including Colorado and South Dakota have specifically stated that actual damages need to be sustained as a result of an attorney's aiding and abetting her client's breach of fiduciary duty.153 C. Case law. 1. Court found attorney liable. Tensfeldt v. Haberman, 768 N.W.2d 641 (WI 2009) Divorce judgment stipulated that Decedent “shall hereafter keep in effect, a Will leaving not less than two-thirds (2/3) of his net estate outright to the three adult children of the parties, or to their heirs by right of representation.” Decedent remarried and updated his Will to leave 1/3 to his new wife and 2/3 to his children.

146 See Anstine v. Alexander, 128 P.3d 249, 255 (Colo. Ct. App. 2005) (stating that the only three elements required for a

claim of aiding and abetting a breach of fiduciary duty are: “(1) breach by a fiduciary of a duty owed to a plaintiff, (2) a defendant's knowing participation in the breach, and (3) damages”), rev'd, 152 P.3d 497 (Colo. 2007).

147 See, e.g., Morganroth & Morganroth v. Norris, McLaughlin & Marcus, P.C., 331 F.3d 406, 415 (3d Cir. 2003);

Hefferman, 2005 U.S. Dist. LEXIS 7414, at *9; In re Ticketplanet.com, 313 B.R. at 63; Reynolds v. Schrock, 107 P.3d 52, 59- 60 (Or. Ct. App. 2005), rev'd, 142 P.3d 1062 (Or. 2006); Chem-Age Indus., 652 N.W.2d at 775 (all requiring substantial assistance in the client's breach).

148 One court established that aiding and abetting claims cannot be valid absent a specific allegation of fraud, conspiracy to

defraud, or any other independent tortious conduct of an attorney. See Alpert v. Crain, Caton & James, P.C., 178 S.W.3d 398, 405-06 (Tex. App. 2005).

149 Chem-Age Indus., 2002 SD 122, 652 N.W.2d at 775. 150 See Thornwood, Inc. v. Jenner & Block, 799 N.E.2d 756, 768 (Ill. App. Ct. 2003) (dictum). 151 Witzman, 601 N.W.2d at 189. 152 Chem-Age Indus., 2002 SD 122, 652 N.W.2d at 774. 153 (See Anstine v. Alexander, 128 P.3d 249, 255 (Colo. Ct. App. 2005), rev'd, 152 P.3d 497 (Colo. 2007); Chem-Age Indus.,

2002 SD 122, 652 N.W.2d at 772).

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A few years later Decedent went to a different attorney (the “drafting attorney”) to update his Will again. Decedent informed drafting attorney of his obligations under the divorce judgment. Drafting attorney stated Decedent had three options: (1) comply with the stipulation; (2) negotiate with the children to alter his obligation;

• r (3) ignore the stipulation, knowing that the children might contest the Will upon

Decedent’s death. Decedent chose option three and drafting attorney prepared a new Will that violated the divorce judgment. Decedent’s divorce attorney subsequently wrote drafting attorney a letter notifying him the Will was in violation

• f the divorce judgment. Drafting attorney did nothing to revise the Will.

The Supreme Court of Wisconsin held, “there is also no question that [drafting attorney] intended that the Will would violate the judgment. He was aware of the court's judgment and knew that the Will he drafted violated it. Since there are no disputed material facts and the only inferences that can be drawn from them lead to the conclusion that [drafting attorney] aided and abetted [Decedent] in his violation

• f a court judgment and consciously intended to do so, summary judgment is

appropriate.” 2. Court found possibility of attorney liability. Kahn v. Britt, 765 S.E.2d 446 (Ct. App. Ga. 2014) Debtor’s mother created a Trust for his benefit. Debtor was the lifetime beneficiary

• f the Trust and Co-Trustee. Trust had spendthrift provisions, but allowed the

Trustees to make distributions to pay Debtor’s creditors. 1998 – 2002: Debtor and co-Trustee transferred roughly $36M from the Trust to Debtor, $5M in required distributions and $31M in “loans” to purchase a ranch and run for political office twice. 2002: Co-Trustee informed Debtor lack of documentation for loans could result in estate taxes. Debtor executed 20 unsecured and backdated promissory notes to the Trust. 2005: Debtor was sued by his niece for fraud, conspiracy, breach of fiduciary, unjust enrichment, and conversion. 2006: Co-Trustee resigned and was replaced by Successor Trustee. Debtor hired attorney to represent Trust, and resigned as trustee. Attorney laid out several options and Debtor agreed that Trust should call loans due. 2007: Debtor transferred $36M to Trust. 2008: Jury returned a verdict in niece’s favor for $4M. When claim was unpaid niece brought claim against Debtor for fraudulently transferring funds to Trust. 2010: Parties reached agreement for Trust to sell cattle ranch and pay judgment.

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Debtor brought suit against attorney who represented the Trust in settlement claiming attorney aided and abetted breach of Trust when proceeding with the settlement and selling the cattle ranch below value. Court recognized aider and abettor liability, but awarded summary judgment because all the elements were not met. 3. Court reversed and remanded summary judgment. Plaintiff’s father created several trusts for the benefit of her and her siblings. The assets in each Trust were controlled by an investment director. Additionally, each Trust contained an in terrorem clause that provided if a beneficiary-initiated litigation to alter or invalidate provisions of the Trust, he or she would forfeit all interests in the Trust and be responsible to reimburse the Trust for attorney’s fees. Plaintiff sought to gain more control over the Trusts that named her as a beneficiary. After a settlement among her siblings, Plaintiff was given the right to appoint a trustee of her choosing over the Trusts that she was a named beneficiary. Attorney on behalf of Plaintiff brought suit alleging breach of fiduciary duty by the investment directors and demanding Plaintiff’s share of the assets be sold. The suit was unsuccessful, and the court held that Plaintiff violated the in terrorem clause and therefore forfeited her interest. Plaintiff brought action against attorney advising her alleging their misconduct lead to the forfeiture of her interest in the trust assets. The United States District Court reversed and remanded finding there were sufficient allegations to state a claim of aiding and abetting breach of fiduciary duty. 4. Qualified immunity. In late 2005, the First Court of Appeals in Houston provided litigators with some relief from aiding-and-abetting liability — but did little to help transactional attorneys.154 The Houston court, in Alpert v. Crain, held that a non-client may not sue a litigator for aiding and abetting a breach of fiduciary duty based solely on the lawyer's providing legal services to the alleged tortfeasor.155 In that case, Alpert alleged that the law firm assisted its client in the following breaches of fiduciary duties: (1) filing lawsuits, complaints, and other allegations; (2) reporting Alpert to the IRS; (3) misusing confidential information to file lawsuits and report Alpert to IRS; and (4) attempting to blackmail Alpert into paying money.156 The Houston court refused to “expand Texas law to allow a non-client to bring a cause

• f action for ‘aiding and abetting’ a breach of fiduciary duty, based upon the

rendition of legal advice to an alleged tortfeasor client.”157 In September 2006, the Oregon Supreme Court signaled a retreat from Granewich, backing off from its prior assertion that a defendant's status as an attorney “is

154 Jessica Palvino. “Aiding and Abetting Liability: Is Privity Making a Comeback?” Texas Bar Journal. 155 Alpert v. Crain, Caton & James, P.C., 178 S.W.3d 398 (Tex. App. — Dallas 2005, pet. denied). 156 Id. at 402-05. 157 Id. at 407.

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irrelevant” in aiding and abetting a client's breach of fiduciary duty.158 In Reynolds

• v. Schrock, the plaintiff sued an attorney and his client over their actions in

connection with the client's breach of a previously negotiated settlement agreement.159 The plaintiff alleged that the lawyer was jointly liable with his client because he had aided and abetted Schrock's torts by giving her “substantial assistance and encouragement” and acting “in concert” with her commission of the torts.160 The Oregon Supreme Court held that a lawyer cannot be liable in such circumstances.161 Although the court did not expressly overrule Granewich, it severely limited Granewich's future application and ultimately created a qualified privilege against joint liability for a lawyer assisting a client's breach of fiduciary duty.162 The court highlighted two features of the privilege that are particularly important.163 First, the privilege protects lawyers only for actions of the kind that are permissible in the course of representing their clients.164 It does not protect attorney conduct that is unrelated to the representation of a client.165 Second, the rule places the burden on the plaintiff to show that the lawyer was acting outside the scope of the lawyer-client relationship.166 5. Federal courts recognizing aider and abettor liability Since 2008, several federal courts have recognized claims for aiding and abetting a client's breach of fiduciary duty, even though state courts in the applicable jurisdiction have not.167 In recognizing a cause of action for aiding and abetting a fiduciary breach, some federal courts provided a specific analysis, discussing why the pertinent state would have likely recognized the cause of action, and how the state court would have decided the issue--if given the opportunity.168 For example, in Reis v. Barley, Snyder, Senft & Cohen, L.L.C., 484 F. Supp. 2d 337 (E.D. Pa. 2007), rev'd on other grounds, 426 F. App'x 79 (3d Cir. 2011), the court predicted that, if given the

• pportunity, the “Supreme Court of Pennsylvania would recognize a cause of action

for aiding and abetting breach of a fiduciary duty.” Id. at 350. In particular, the court set forth three elements for aiding and abetting breach of a fiduciary duty under Pennsylvania law: “(1) a breach of a fiduciary duty owed to another; (2) knowledge of the breach by the aider and abettor; and (3) substantial assistance or encouragement by the aider and abettor in effecting that breach.” Id. In a separate case and jurisdiction, the court stated that the “New Hampshire Supreme Court has yet to expressly consider whether to adopt the tort of aiding and abetting a breach of fiduciary duty ... [but] would recognize the tort, and would adopt a

158 Reynolds v. Schrock, 142 P.3d 1062 (Or. 2006). 159 Id. at 1063-64. 160 Id. 161 Id. at 1071. 162 Id. at 1065-68. 163 Id. at 1071. 164 Id. 165 Id. 166 Id. 167 Lewinbuk, Katerina P. (2018) "Keep Suing All the Lawyers: Recent Developments in Claims Against Lawyers for Aiding

& Abetting a Client’s Breach of Fiduciary Duty," St. Mary's Journal on Legal Malpractice & Ethics: Vol. 8 : No. 1 , Article 4.

168 Id.

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version incorporating the principles of aiding and abetting liability set forth in the Restatement (Second) of Torts.” Invest Almaz v. Temple-Inland Forest Prods. Corp., 243 F.3d 57, 82-83 (1st Cir. 2001).