Estate Planning Attorney Cannot Name Himself as Beneficiary

Last weekend, we noticed an article in the Detroit Free Press about one of our colleagues from Troy, MI who got into some hot water relative to his estate planning practice. He had a long-time family friend who was wealthly; the attorney assisted in his wealthy friend’s estate plan.

During the process of the drafting of the estate plan, this wealthy individual, and good friend of the attorney, named his attorney friend as a beneficiary in the trust that was being prepared. The trust was funded with well over twenty million dollars, of which the attorney was to receive $17 million.

Wow; if the attorney outlived his good friend, which he did, he set himself up for a huge payday. Problem: there is a an rule of professional conduct that forbids an attorney from naming himself as a beneficiary under any estate plan that he drafts unless he is a member of the client’s family.

The decedent in this case did have heirs at law; they sued the estate planning attorney. The matter was litigated and the probate judge disallowed the transfer to the attorney.

Now the matter is on appeal to the Michigan Court of Appeals; oral argument was conducted a few weeks ago and a decision is expected soon. We will track this case as we are very interested in knowing how the Court of Appeals will treat what this attorney did.

Ethics matter. When hiring an estate planning attorney, be sure to check their background.