Law Tips; Estate & Trust Administration Tune-up, Pt. 3; The Duty of Confidentiality

After you have established who is your client, agreed on a reasonable fee and reviewed all the possible conflicts of interest, there are yet additional curves in the probate road about which our expert warns you.  Kristin Steckbeck Bilinski’s advice on being aware of the good fiduciary who may go bad and dealing with beneficiaries were parts 1 and 2 of our Estate & Trust Administration Tune-up series.  If you didn’t get the chance to read Kristin’s previous counsel, you may want to page back in Law Tips after we finish here.  To wind up our series, she offers an opinion on your duty of confidentiality. 

Does lawyer-client confidentiality prevent the fiduciary’s lawyer from disclosing information to estate or trust beneficiaries? In my opinion, the answer to this question is unclear. Rule 1.6 of the Indiana Rules of Professional Conduct states that the lawyer may make such disclosure as is “impliedly authorized to carry out the representation.” It has been suggested that the “impliedly authorized” language of Rule 1.6 permits, but does not require, disclosures to the beneficiaries of past breaches of fiduciary duty in order to protect the beneficiaries. 9

But what about a beneficiary who is reasonably requesting information in the case where the fiduciary has done nothing wrong? In such cases, it is best for the lawyer to strongly encourage the fiduciary to communicate more openly with the beneficiaries. 10 This is yet another area where open and honest (and sometimes blunt) client communication can save a lawyer much doubt and heartache.

In more extreme situations, Rule 1.6 governs in cases where the lawyer suspects that the fiduciary may be contemplating not just a breach of fiduciary duty, but a breach rising to the level of a criminal or fraudulent action. In such cases, the lawyer may disclose otherwise privileged information in order to prevent action that is “reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer’s services.” If the criminal or fraudulent action has already taken place and is subsequently discovered by the lawyer, the lawyer may disclose privileged information if such disclosure will “prevent, mitigate, or rectify” any “substantial injury” that would otherwise result from the fiduciary’s actions.

As for the right or obligation of the lawyer to withdraw from representing a fiduciary who has or is going to commit a crime or fraud, here’s my comment on communication with the client:  It is unfortunate that Rule 1.3 is ever an issue for any lawyer, but busy days and heavy workloads mean that the duty to “act with reasonable diligence and promptness” is frequently compromised. Rule 1.3 serves as a good reminder – it is always incumbent on the lawyer to act with reasonable diligence in representing the fiduciary client and to work hard to keep the fiduciary well-informed.

This concludes our Estate & Trust Administration Tune-up here on Law Tips. I am grateful to Kristin Steckbeck Bilinski for providing her valuable guidance for avoiding ethical dilemmas along the probate road. If you need to review her ethical tips in Parts 1 and 2 of this series, scroll down below.

There is a full array of expert advice from the panel of our CLE program entitled Estate & Trust Administration Skills: Bumps, Curves and Detours Along the Probate Road  that’s available as an On Demand Video or near you as a Video Replay Seminar, Click Here. Or if you prefer your CLE live, the Estate & Admin. Skills Part 3: Timeout to Taxes, is now available as a Live In-Person Seminar on October 24, Click Here

9  American College of Trust and Estate Counsel commentary to Model Rule 1.6. See also Report of the Special Study Committee on Professional Responsibility: Counseling the Fiduciary, Real Property, Probate and Trust Journal Vol. 28, No.4 (1994).

10 See ACTEC commentary to Model Rule 1.2, which states that it is primarily the fiduciary’s responsibility to communicate with beneficiaries, and not the lawyer’s.

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Our Law Tips Faculty Participant:
Kristin Steckbeck Bilinski joined Longsworth Law LLC, Fort Wayne, Indiana, in 2011 as an associate. Prior to joining Longsworth Law LLC, Kristin practiced in the areas of estate planning, estate administration, and general civil litigation. She was admitted to practice in Indiana in 2007 after graduating cum laude from Indiana University Maurer School of Law. Kristin’s community service includes the Juvenile Diabetes Research Foundation, Northern Indiana Family Mentor Coordinator and Fort Wayne Business People.

About our Law Tips blogger:
Nancy Hurley, Law Tips blogger, has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We are utilizing her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook and Twitter pages, and other places her legal experience lends itself.

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