Does the Attorney-Client privilege apply to Trustees and Powers of Attorney? (Probate Code section 4123)

underwood-attorney-client-privilege-power-attorney-300x300The attorney-client privilege is well-known for a reason. It is a tenant of the legal profession, allowing for clients to approach attorneys with honesty and sincerity without fear that what they say will ever “leave the room,” so to speak. 

But its application to various situations and circumstances can become quite complicated. For example, two of the most common types of arrangements when it comes to estate planning are the establishment of trusts and powers of attorney. Both serve unique purposes, and both approach the attorney-client privilege quite differently. 

What is a power of attorney?

A power of attorney is, essentially, a contract between two people, wherein one person authorizes the other to act as their agent. The agent receiving the power to act on behalf of the other (the “principal”) is called the “attorney-in-fact,” and they may act on the principal’s behalf for a number of transactions. (Prob. Code § 4123 (a).) 

If that seems like an overly broad definition, it’s because it is. There isn’t a set amount of powers an attorney in fact has or does not have. The power of the attorney in fact can be small and specific, or as broad and encompassing as the principal desires. (Prob. Code § 4260.) 

And to complicate matters further, the power of attorney can be created by using a standard form developed by the State, called the Uniform Statutory Form under Probate Code section 4401, or an in-depth specific contract that incorporates the laws of California’s probate code, both of which will carry varying degrees of authority for the attorney-in-fact. 

In sum, no two powers of attorney are the same. And litigants should take great care to analyze the specific, written provisions of an individual power of attorney agreement before moving forward with an action that might violate it. 

What is a durable power of attorney?

Among the various types of powers of attorney, the durable power of attorney may be the most practical for estate planning purposes. It’s a sad reality that people become incapacitated with age. With a durable power of attorney, the attorney-in-fact may still act on behalf of the principal for certain actions, even if the principal is no longer mentally capable of making decisions on their own. 

The reason it’s called “durable” just means that the arrangement survives the principal’s incapacity, whereas with other power of attorney arrangements, the agency relationship would terminate. (Prob. Code § 4124.) 

Of course, this means that the creation of a durable power of attorney is much more complicated than an ordinary power of attorney arrangement. Specific language must be used, and parties to the agreement may need to fix a date if the power is “springing.”  As such, for the creation of such a relationship, litigants would be well-advised to seek knowledgeable counsel to avoid the agreement failing under judicial scrutiny. 

What is the attorney-client privilege?

The attorney-client privilege is perhaps the best-known of the many evidentiary privileges that exist under the law. At its core, it simply provides that a client has the privilege to not disclose confidential communications made between them and their attorney. (Evid. Code § 954.) In addition, even if the client is not a party to an action, they can step in as a non-party to prevent the disclosure of a privileged communication. (Mylan Laboratories, Inc. v. Soon-Shiong (1999) 76 Cal.App.4th 71, 79.) 

In California, the privilege is absolute and incredibly broad. Moreover, it lasts until the client’s estate is finally administrated via probate, and even survives the lawyer’s death. This is because the client holds the privilege. Thus, the death of the lawyer who received the privileged communications is immaterial. The privilege survives. 

How does the Attorney-Client privilege apply to Powers of Attorney?

The reason there is confusion regarding powers of attorney and attorney-client privilege is because of naming conventions. 

As noted above, the agent in a power of attorney arrangement is called an “attorney-in-fact.” This has led some to believe that communications between principal and attorney in fact are protected by the attorney client privilege. After all, the agent is called an attorney. 

Under the law, this could not be further from the truth. Attorneys “in-fact” and attorneys “at law” are totally different. Individuals in California (and every other state, for that matter) cannot practice law unless they are a member of the State Bar. (Drake v. Superior Court (1994) 21 Cal.App.4th 1826, 1830.) 

It follows, then, that the protections of the attorney-client privilege do, in fact, attach to communications made within the scope of a power of attorney arrangement. To hold otherwise would invite the absurd statutory construction that the Legislature would both allow and sanction non-attorneys to engage in the practice of law. (Bus. & Prof. Code § 6125.) 

How does the Attorney-Client privilege apply to Trusts?

Another tenant of estate planning is the establishment of trusts to pass on certain assets to one’s children or grandchildren. Trusts, however, can be complicated to carry out once the settlors (the people who created the trust) pass away. For the trustees attempting to administer the trust in accordance with its provisions, it’s a common practice to employ an attorney for assistance. 

Trustees, though, are in a unique position of being both individual persons and representatives for the trust. Thus, the question arises as to whether the privilege belongs to them, personally, or to each trustee under the trust itself. 

Where a trustee retains a lawyer on behalf of the trust, the trustee can still be considered the attorney’s “client.” (Moeller v. Superior Court (1997) 16 Cal.4th 1124, 1130.) But under the law, the privilege vests in the trustee, as an office, as opposed to the individual filling the position of trustee on any given occasion. 

If the law were otherwise, then it would effectively kneecap the operation of trusts altogether. “For a trust to continue to operate smoothly when a change in trustee occurs, the power to assert the attorney-client privilege must pass from the predecessor trustee to the successor.” (Id.) 

As such, trustees should take care to realize that their communications with lawyers, while privileged, apply to the trustee in its representative capacity, not to the trustee as an individual. 

How the Lawyers at the Underwood Law Firm Can Help

Navigating the attorney-client privilege can be a stressful endeavor for litigants, especially when preparing for a deposition or responding to discovery. These situations can be stressful, and difficult, especially when the way out is not entirely clear. Fortunately, the lawyers at the Underwood Law Firm specialize in partition actions and solving difficult co-ownership problems though civil litigation, helping good people end bad real estate partnerships. If you have found yourself in one of these situations, then please do not hesitate to contact us today.


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