June 30, 2016

Attorney as Beneficiary of a Client's Estate (Don't do it!)

Santa Barbara County Courthouse
Attorneys can receive gifts from clients. For example, one client gave me cookies during the holiday season a few years ago. Attorneys, however, should generally never write a testamentary instrument that provides a "gift" of a client's estate to them. One attorney was recently found culpable in making this grievous mistake.

Butler v. LeBouef (2016) ___ Cal.App.4th _____

The published opinion's first paragraph provided a clear preview of how the appeal would be decided:

"An ethical estate planning attorney will plan for his client, not for himself. (See Estate of Moore (2015) 240 Cal.App.4th 1101, 1103.) A license to practice law is not a license to take advantage of an elderly and mentally infirm client. As we shall explain, the factual findings of the trial court compel the conclusion that appellant used his license to take advantage of an elderly and mentally infirm person to enrich himself. The trial court factual findings are disturbing, fatal to appellant's contentions, and suggest criminal culpability."

The trial court found that attorney John F. LeBouef had authored the will and trust of the late John A Patton and made himself the principal beneficiary to a $5 million estate. Naturally, the trust and will were invalidated.

The trial court also further found against attorney LeBouef:

"In a Supplemental Statement of Decision, the trial court factually found that appellant caused the loss of the original trust instrument, which made it impossible for the court to determine the true terms of the trust. The trial court declared the will and trust invalid and removed appellant as trustee. Appellant was ordered to turn over the trust assets and pay $1,256,971 attorney fees pursuant to section 21380, subdivision (d)."

The loss of the original trust instrument was highly suspicious. According to a footnote in the opinion, "on April 24, 2012, appellant reported that Patton's house was burglarized and that the burglar took the original trust document and a laptop computer used by appellant to prepare trust documents. The burglary occurred just before appellant was scheduled to produce the document for his deposition and a forensic examination. The police suspected it was a staged burglary because nothing else was taken and the house was made to look like it was ransacked. Expensive watches and art work were in plain sight but were not taken."

The opinion concluded:

"The clerk is directed to forward a copy of this opinion to the California State Bar (Bus. & Prof. Code, § 6103.6) and the district attorney for the County of Santa Barbara. We express no opinion on discipline and/or the decision to initiate criminal prosecution." 

I do not foresee this ending well for Mr. LeBouef..........