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The law on probate in Washington, D.C. is complex, as evidenced by the many cases from D.C. probate law which show relatively high degrees of factual complexity. One of the “subareas” or subtopics within D.C. probate law pertains to compensation for attorneys, or trustees, who have fiduciary obligations. In the past, we’ve discussed some of the rules in Maryland law regarding compensation for trustees for services rendered in the course of performing their fiduciary obligations. The law on compensation for those with fiduciary obligations in D.C. may not be binding on Maryland courts, but often D.C. cases provide a form of substantial persuasive authority which many Marylanders should know about. In other words, even though D.C. cases may not be “controlling” per se, they are still highly relevant because of their potential impact on Maryland court determinations.
The case of In re Estate of Grealis (2006) involved an attorney who performed services for a guardianship established by two siblings on behalf of their mother. The issue of compensation for services surfaced after the attorney was initially paid via private sources by the siblings. Let’s examine this case to learn more about the details of attorney compensation via private sources (as opposed to estate sources) in D.C. law.
Facts of the Case
As mentioned, two siblings, William and Jeanne Grealis, initiated the process for establishing a guardianship for their mother. To assist with petition paperwork and other related proceedings, the siblings engaged an attorney. The attorney performed the requested services after initially receiving a $5,000 retainer. After services were rendered, the attorney filed a formal request for payment of the remainder of his fees and expenses. Importantly, the siblings paid the $5,000 from a private bank account – not from the guardianship fund specifically associated with the mother’s guardianship.
The attorney essentially argued that the fact that the retainer was paid out of private sources should have zero impact on his ability to collect all amounts owed in full. At the trial court level, however, the court ruled that this payment via private sources should not have been allowed; the court ruled that such a payment must be returned, and that the attorney would then be compensated at a lower rate. The attorney appealed, arguing that the payment via private sources was perfectly acceptable under the current state of the law.
Ruling & Analysis
The appellate division overturned the trial court (“Superior Court”) determination, holding that payment from private funds for privately negotiated legal services in these circumstances was permissible. Consequently, the attorney was not required to return the retainer and accept a lower overall rate for his services.
The reasoning given by the court is relatively involved, but one of the critical points is that imposing a requirement that “unapproved” payments from private sources be returned – or, put differently, that payments from private sources be “preapproved” by the court to remain legally permitted – would constitute an improper burden on the court system. Further, the court stated that such a requirement could cause guardianship formation (and also will drafting and trust establishment) to slow down, as attorneys would hesitate to accept cases involving smaller estates because of the probability of receiving lower rates as compared to rates obtained via private sources.
Although this is a guardianship case, this matter still sets a precedent which applies to attorney compensation in other estate contexts. Attorneys who perform services for trusts, as an example, may also receive private payments for services without risking the return of those services because of lack of preapproval. These are precisely the sort of facts which a skilled attorney will know and be able to convey to prospective litigants.
Contact the Murphy Law Firm for More Resources
Readers who want to learn more about the concept, and contours, of “undue influence” in will formation, the basics of drafting wills, establishing irrevocable trusts or revocable trusts, or any other related family law matter, contact one of the estate planning attorneys at the Murphy Law Firm today by calling 240-219-1187.
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