Last month, my Weintraub colleagues and I had the pleasure of speaking at the Professional Fiduciary Association of California annual conference on the topic of the attorney-client privilege and its application to clients serving in a fiduciary capacity (trustee, executor, conservator, agent, etc.).

Most people have a cursory understanding of what the attorney-client privilege does – it keeps communications between clients and their attorneys confidential and free from discovery, which fosters honest and complete communication between client and lawyer – but many individuals don’t realize that there are important limitations and exceptions to the privilege, particularly for those serving as fiduciaries. These crucial limitations and exceptions apply regardless of whether the fiduciary is a professional fiduciary or simply an individual who is administering a trust or estate or serving as a conservator for a loved one or friend.

If you are serving as a fiduciary in any capacity, it is important that you know when your communications with your attorney are private and when they are not. Here are the Top 12 Takeaways from our presentation “Here Today, Gone Tomorrow: A Fiduciary’s Guide to the Attorney-Client Privilege”:

  1. Attorney-Client Privilege and the Successor Trustee: The attorney-client privilege vests in the office of the trustee and not in the individual serving as trustee. Therefore, a successor trustee can obtain any confidential communication between a previous trustee and his or her attorney. This exception to the attorney-client privilege (“the Fiduciary Exception”) often comes as a shock to trustees who think that all communications with their counsel are privileged under all circumstances. Moreover, any provision in the trust document that tries to limit the Fiduciary Exception is void for public policy when the previous trustee is alleged to have committed acts of intentional misconduct, gross negligence, or reckless indifference.
  2. There Is a Work-Around to the Fiduciary Exception: Remember, the Fiduciary Exception to the attorney-client privilege applies because the privilege belongs to the office of trustee, and not to the individual. Therefore, if a trustee retains personal counsel and pays for the attorney’s services out of his or her own pocket (and not from the trust), then the Fiduciary Exception does not apply and the attorney-client privilege is preserved. So if you are a trustee and you want to ensure that your communications with your counsel are confidential, then you should retain personal counsel. Otherwise, be aware that your communications will be discoverable by a successor trustee.
  3. Trust Beneficiaries Are Not Entitled to a Trustee’s Confidential Communications: Although a successor trustee is entitled to confidential communications between a previous trustee and his or her attorneys, beneficiaries of the trust are not entitled to these communications and cannot compel discovery of them. However, as the holder of the privilege, the successor trustee can decide to share a predecessor trustee’s communications with the trust beneficiaries.
  4. Executors Are Also Subject to the Fiduciary Exception: Just as with trustees, the attorney-client privilege belongs to the office of Executor and a successor executor can obtain the confidential communications that any previous executor had with his or her attorney.
  5. An Executor Holds the Attorney-Client Privilege Belonging to the Decedent: If the Decedent had communications with an attorney during his or her lifetime, the Decedent’s attorney-client privilege over those communications transfers to the duly-appointed Executor. But once the estate is closed and the Executor is discharged, the attorney-client privilege is extinguished and any communications the Decedent had with his or her attorney are no longer privileged.
  6. Conservators Are Also Subject to the Fiduciary Exception: As with trustees and executors, a successor conservator can obtain all communications between a predecessor conservator and his or her attorney from the successor conservator. The attorney-client privilege transfers to the successor conservator.
  7. A Conservator Also Holds the Attorney-Client Privilege for the Conservatee, Unless There Is a Conflict of Interest: If a conservatorship is in place, the conservator holds the conservatee’s attorney-client privilege unless there is an actual or apparent conflict of interest between the conservator and conservatee. For example, if a conservatee wishes to terminate the conservatorship and the conservator opposes the termination, the conservatee will retain his or her attorney-client privilege with respect to the termination action. But if the conservatee is sued by a third-party, the conservatee’s attorney-client privilege will be held by the conservator, and not the conservatee.
  8. The Rules for Attorney-Client Privilege for Guardians Are the Same as for Conservators: As with conservators, the attorney-client privilege follows the office of guardian and successor guardians can obtain privileged communications between a former guardian and his or her counsel. Also, a guardian holds the attorney-client privilege of his or her ward, unless there is an actual or apparent conflict of interest between the guardian and the ward, in which case the attorney-client privilege remains with the ward.
  9. Agents Under Powers of Attorney: The Fiduciary Exception would also apply, meaning that a successor agent would be able to obtain communications between a former agent and his or her attorney.
  10. Invoices for Services Performed Are Confidential Under Certain Circumstances: Attorney invoices for a fiduciary client are protected by the attorney-client privilege when there is active litigation. The reason is that information set forth in the invoices can provide insight into litigation strategy, the discovery of which would provide an unfair advantage to the opposing party. What is unclear under current law, however, is how far the attorney-client privilege extends for non-litigation services, as with attorney invoices for services such as trust administration. Depending upon the circumstances, these invoices may or may not be privileged. Trustee billings are not entitled to any attorney-client privilege except to the extent that they include attorney-client privileged communications or attorney-work product. Any time entries that disclose such communications or attorney-work product should be redacted to prevent the privilege from being inadvertently waived.
  11. Other Common Exceptions to the Attorney-Client Privilege: There is no accountant-client privilege and only a limited privilege for non-attorney tax practitioners for “tax advice.” Moreover, tax return preparation services rendered by an attorney are not protected by the attorney-client privilege. There is also no privilege between fiduciaries and third-parties such as appraisers, accountants, and the like, but the privilege does apply for communications between the attorney and such third-parties if the third-party’s services are necessary to provide information to the attorney to provide legal services to the client. Thus, if the fiduciary wants to ensure that communications with the third-party provider remain confidential, the attorney, and not the fiduciary, should retain the provider. Finally, there is no attorney-client privilege for communications by a client who seeks legal assistance to plan or to perpetrate a crime.
  12. Beware of Waiving the Attorney-Client Privilege: Even where the attorney-client privilege applies, it can be easily waived. Any disclosure by the client of his or her communications with counsel can be the basis of a waiver, even where the client did not intend to waive the privilege. (A client’s overshare on social media of an attorney’s advice has been determined to waive the privilege.) It is important that you consult with your attorney about how to ensure that all privileges remain intact.

The foregoing list demonstrates some, but nowhere near all, of the nuances that impact communications between fiduciaries, whether professional and non-professional, and their attorneys. If you are serving as a fiduciary, it is critical to understand these nuances so you know when your communications are protected by the attorney-client privilege and when they are not.

If you would like a digital copy of our presentation materials, please feel free to email me.