In Snow, Christensen & Martineau v. Lindberg, 299 P.3d 1058 (Utah 2013), the Utah Supreme Court held that the terms of a reformed trust were so dramatically different from the terms of the original trust that the attorneys for the original trust were not required to disgorge privileged attorney-client information to the Special Fiduciary of the reformed trust and were not disqualified from representing parties adverse to the reformed trust.
A Utah district court had reformed the original trust several years earlier under the doctrine of cy pres. While application of the cy pres doctrine requires that the trust be reformed in a manner that reflects the settlor’s intent and preserves the essential purposes of the trust, the Utah Supreme Court affirmed the reformation at that time on the basis of the defense of laches, without evaluating whether the reformation was consistent with the requirements of cy pres. In the Snow opinion, the Court explained that the reformation of the trust had in fact been improper. The original trust’s purpose was the advancement of the FLDS church and its tenets, while the reformed trust was to be administered according to secular, humanitarian principles. The Court explained that, absent the defense of laches, the reformation would have been set aside in the prior proceedings. The trust had nonetheless been reformed, and the reformed trust, with purposes far different from the purposes of the original trust, was a separate and distinct entity from the original trust. The attorney-client relationship that existed between the law firm and the original trust did not therefore extend to the reformed trust. Not only was the law firm not required to disgorge privileged attorney-client information to the Special Fiduciary of the reformed trust, but it was prohibited from doing so by Rule 1.9(c) of the Utah Rules of Professional Conduct.
The Court rejected the law firm’s contention that a charitable trust is merely a fiduciary relationship that exists between the trustees and the beneficiaries, and is not an entity capable of being a client for purposes of the attorney-client privilege. The law firm argued that the attorney-client relationship existed only with the trustees of the original trust, not with the trust itself. However, the Court held that, under Rule 504 of the Utah Rules of Evidence, the original trust was an entity capable of forming an attorney-client relationship. The Court explained that, under Rule 504, it is the trust that holds the privilege and the trustee who claims the privilege on behalf of the trust. Nonetheless, as noted above, the Court held in favor of the law firm because the reformed trust was an entirely different entity from the original trust.
For an in-depth discussion of trusts in Utah, see The Utah Law of Trusts & Estates, a comprehensive online legal reference treatise that is available on this website.
Rust Tippett is the author of this blog post.
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This blog post in no way creates an attorney-client relationship between the reader and either Robert S. (Rust) Tippett or Bennett Tueller Johnson & Deere, LLC. The reader should consult with his or her own estate planning attorney regarding his or her particular circumstances.