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We have a family member who has hired an attorney in the state of California. The family member is the beneficiary of a special needs trust (an SNT). The family member wishes to break the trust, and access the cash without restrictions.

The issue is that the attorney is causing the trust significant legal costs, yet the trust is also this family member's only form of support. The family member has no job, no apparent desire to work, and no other source of reliable support.

The family member is very clearly both "substantially unable to manage his or her own financial resources" and subject to "undue influence". However, there is no formal diagnosis of a disability, and the family member will not permit a diagnosis to be made. For the legal process to even get to a ruling on the merits of the capacity claims will substantially diminish the value in the trust, exhausting it to the point where it can't support the family member.

The family is concerned that the attorney is seeking profit over the best interests of his/her client. And that this action will diminish the trust regardless of outcome, destroying the entire purpose for the trust.

Where might that ethical line exist for an attorney in representing a client with signs of mental illness intent on damaging their own interest. Is there a way for the family to step in?

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This is the trustee's decision; not the family's

(Legally. Of course, concerned family can always engage outside the legal framework).

The trustee's primary duty is to act in the best interests of the beneficiary. They have to decide which of two alternatives is better:

  1. Allowing the trust to be broken (assuming that this is actually possible under the trust deed) and placing the maximum amount of assets in the hands of the beneficiary directly.
  2. Contesting the attempt and, win or lose, reducing the assets.

Whether the lawyer is behaving ethically or not is, strictly speaking, none of the trustee's concern. However, to examine that we need to consider what the lawyer's ethical duty is. For California, these are set out here.

Please take your time to go through all the rules but I will mention Rule 2.1 Advisor:

In representing a client, a lawyer shall exercise independent professional judgment and render candid advice.

Comment

  1. A lawyer ordinarily has no duty to initiate investigation of a client’s affairs or to give advice that the client has indicated is unwanted, but a lawyer may initiate advice to a client when doing so appears to be in the client’s interest.
  1. This rule does not preclude a lawyer who renders advice from referring to considerations other than the law, such as moral, economic, social and political factors that may be relevant to the client’s situation.

The lawyer has no duty to advise your relative on what to do - they can, but they are not obliged to. In particular, if your relative has said "I want to do this and I won't hear a word against it" then there a lawyer who shuts up and follows those instructions has not breached their professional ethics.

In short, the family member has the right to challenge the trustee and their lawyer has an ethical duty to assist them in doing so.

Of course, if the family member ha been declared by the state to be incapable of managing their own affairs and has had a guardian appointed then the person lacks the legal capacity to take this course of action. If that hasn’t happened then they are legally competent notwithstanding the family’s lay opinion.

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    Edited to make clear this is the family seeking advice. The professional trustee has chosen so far to oppose the dissolution of the trust. The family member's goal appears to be deliberately working to destroy the trust's value out of anger. The question relates to the ethical duty of a lawyer in such a case. – Scott Brown Jun 17 '20 at 20:30
  • Would there be a process for the family and/or trustee to make a complaint to the California Bar Association regarding the ethics of the lawyer who is working for the family member? – nick012000 Jun 18 '20 at 1:02
  • @nick012000 yes, there is a process. However, as there is no evidence the lawyer is behaving unethically so there would be no point in doing so. The family member has every right to challenge the trustee and their lawyer is ethically required to assist them in doing so. – Dale M♦ Jun 18 '20 at 2:03
  • @DaleM Taking advantage of an intellectually disabled client to rob them of their money isn't unethical? – nick012000 Jun 20 '20 at 5:23
  • @nick012000 of course that would be unethical. Representing a person in defense of their legal rights irrespective of their cognitive abilities isn’t. It’s far more likely that while you see option 1, option 2 is what’s actually happening. People on opposite sides of a dispute often struggle to accept that the other side is acting in accordance with their legitimately held beliefs - make the effort - it makes resolution much quicker, cheaper and less emotionally damaging. – Dale M♦ Jun 20 '20 at 5:27
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The family member is very clearly both "substantially unable to manage his or her own financial resources" and subject to "undue influence".

The only evidence for this you have presented is that they don't have a job and don't want to work. Being lazy is not the same as being mentally ill. Being poor or bad with money isn't an "undue influence." Heck, it's likely a problem for the average American. As @Dale M describes very well, the trustee owns this entire issue. The lawyer may be ethically bound if the beneficiary were acting truly crazy, but wanting money now isn't a definition of being mentally impaired.

Every American has the right to take matters before a court. Acting against your own interest out of spite certainly isn't illegal or even immoral. It tends to be a self-correcting issue - once the money in the trust is gone, the issue will be gone as well.

If the family has actual evidence of mental illness, they can petition a court to declare the beneficiary incompetent to manage their own affairs, a charge which I imagine the trust would be bound to assist in fighting. If found incompetent, the court would then appoint a guardian who would assume legal responsibility for things like hiring lawyers. Understand that this process removes the person's liberty and is a pretty big deal. How they spend their time and money would not be at issue.

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  • In this case the settlors who set up the trust were focused on a history of choices regarding spending money, and chose to provide the inheritance on the condition the money be professionally managed. Thus we have an additional issue to balance: who in this picture is enforcing the written instructions of settlors now deceased. The trustee here feels that a conservatorship is warranted and necessary, irrespective of the family's position stated above. – Scott Brown Jun 29 '20 at 16:15
  • The trustee, in the above case, based on the totality of the situation, feels an LPS conservatorship is the way forward. That of course would further upset the beneficiary, who among other issues has a long history of seeking revenge. That beneficiary has already physically threatened the trustee including intruding into the trustee's home in the middle of the night. – Scott Brown Jun 29 '20 at 16:24

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