The ABA website says:
"1.8 (c) A lawyer shall not solicit any substantial gift from a client, including a testamentary gift, or prepare on behalf of a client an instrument giving the lawyer or a person related to the lawyer any substantial gift unless the lawyer or other recipient of the gift is related to the client."
ABA website comments: paragraph (c) does not prohibit the lawyer from accepting it, although such a gift may be voidable by the client under the doctrine of undue influence, which treats client gifts as presumptively fraudulent.
A non-relative, non-related lawyer prepares a trust, funded SOLELY by life insurance proceeds, for their client.
There are 2 primary beneficiaries on the life insurance policy: 1) the lawyer individually and 2) the Trust.
Is he breaking rules?"He" meaning the lawyer. Sources: http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_8_current_clients_specific_rules.html http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_8_current_clients_specific_rules/comment_on_rule_1_8.html
What, are you studying for the MPRE (Multistate Professional Responsibility Exam)? First off, the ABA rules are only "model" rules. You need to look at what rules were actually adopted by the state with jurisdiction (the are probably the same, but you have to look at the state rules and the ethics opinions from the state in question).
There may be a misunderstanding of the situation on your end, or at least in the way you presented it here. It is not clear there is a problem. Who is a beneficiary of a life insurance policy is accomplished via forms from the insurance company. The key factual question is what is the attorney a beneficiary of, is the attorney a direct beneficiary of the life insurance policy, or is the attorney a beneficiary of the trust? Very different outcomes.
If the attorney is a beneficiary of the life insurance policy, then it is very unlikely a violation. The attorney didn't draft anything to accomplish that. Generally, that is a notarized form provided by the insurance company. The attorney may still have exercised undue influence, but no apparent rule violation. Maybe it is violation of the first part of 1.8(C), solicit substantial testamentary gift, but the key there is that the attorney has to solicit it.
If the attorney drafted the trust document and the trust document makes the attorney a beneficiary of that trust, that would be problematic and a likely violation.
You have much clearer violation if the attorney drafted the trust and is also a beneficiary of the trust (note, the attorney could be named as a trustee of the trust without any violation). If the attorney is merely a beneficiary of the life insurance policy, then the specific circumstances surrounded that situation must be explored to determine whether there is a violation.
The ABA rules are "model rules" meaning the states are free to adopt them if they wish. States are free to draft their own ethics rules, use the ABA model rules as a starting point or adopt the ABA model rules entirely.
A version of Maryland's ethics rules can be found at: http://www.law.cornell.edu/ethics/md/code/
Maryland's version of Rule 1.8(c) states:
"A lawyer shall not solicit any substantial gift from a client, including a testamentary gift, or prepare on behalf of a client an instrument giving the lawyer or a person related to the lawyer any substantial gift unless the lawyer or other recipient of the gift is related to the client. For purposes of this paragraph, related persons include a spouse, child, grandchild, parent, grandparent or other relative or individual with whom the lawyer or the client maintains a close, familial relationship."
Licensed in Maryland and Pennsylvania. This is not legal advice. I am not your attorney until we have mutually agreed that I am your attorney. You should consult with an attorney licensed to practice in your jurisdiction regarding your specific circumstances.
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