|
Syllabus
An attorney who is executor or administrator of an estate or who is attorney for an estate may not ethically charge or receive or participate in a commission on the sale of real estate or other assets of the estate whether or not he has a real estate broker's or agent's license.
Facts
An attorney is the executor or administrator of an estate or is attorney for the estate. In settlement of the estate, real estate or other assets belonging to the estate are sold. May the attorney, who has, or is connected with someone who has, a real estate broker's or agent's license receive or participate in a commission on the sale?
Opinion
An executor or administrator of an estate, whether lawyer or layman, is forbidden to so deal with the assets of the estate that he makes a personal profit out of such dealings, whether such profit depletes the estate or not - In Re Macky's Estate, 73 Colo. 1, 213 P. 131 (1923). In the Macky case it was held that an executor could not receive a commission on premiums paid for his bond as executor.
In Murray v. Stuart, 79 Colo. 454, 247 P. 187 (1926), directly in point, it was held that an administrator who participated in the sale of realty belonging to an estate could not lawfully charge or collect a commission on the sale, even though it was agreed the commission would be paid. The Court held that this agreement was contrary to public policy inasmuch as it was in breach of the administrator's trust.
As a fiduciary, an executor or administrator occupies a position of trust and confidence and is held to the highest degree of good faith. The purpose of the rule forbidding a fiduciary to profit personally from his dealings with the assets entrusted to him is to prevent both the fact and the appearance of fraud and breach of the confidential relationship.
The lawyer, who is enjoined from any conduct involving disloyalty to the law and is held to the utmost fidelity to private and public duty by Canon 32, and who is required by Canon 29 at all times to uphold the honor and maintain the dignity of the profession, is no less bound to observe the law and appearances than the lay fiduciary.
Therefore, the lawyer, acting as executor or administrator, may not receive or participate in a commission on the sale of estate assets.
The rationale of the above applies just as strongly to the attorney for an estate. He is in no less a confidential position with regard to his client than is an executor or administrator with regard to the beneficiary of an estate. To hold otherwise and to permit a lawyer for an estate to receive or participate in commissions for dealing with estate properties or interests when he is not permitted to do so as executor or administrator would be to hold that a lesser degree of fidelity to his trust is required of a lawyer acting as such than is required of the same lawyer acting in the lay position of executor or administrator. To state the proposition is to refute it.
Canon 11 provides in part: "Money of the client or collected for the client or other trust property coming into the possession of the lawyer should be reported and accounted for promptly, and should not under any circumstances be commingled with his own or be used by him."
Therefore, any commission coming to a lawyer for an estate as the result of his dealing with estate property is trust property belonging to the estate and must be turned over to it.
1995 Addendum
This Opinion was based upon the Canons of Professional Ethics, the predecessor to the Code of Professional Responsibility. The Colorado Rules of Professional Conduct became effective on January 1, 1993, replacing the Code of Professional Responsibility. While the language of the Rules is somewhat different from the Code and the Canons, the Ethics Committee considers this Opinion to continue to provide guidance to attorneys in this area. Attorneys are cautioned to review The Colorado Code of Professional Responsibility (found in the Colorado Ethics Handbook), to update the research contained in this Opinion and to conduct any independent research necessary.
Relevant provisions of the Colorado Rules of Professional Conduct, which should be examined together with this Opinion, are Rule 1.5 (requiring reasonable fees) and Rules 1.8(a) and (b) (regarding conflicts of interest). The conduct discussed in this opinion could potentially be violative of these Rules and, if the commission is contingent upon the successful sale of an asset, the provisions of C.R.C.P. Chapter 23.3 would also be applicable.
|
Cart - empty 
