Mid-America Living Trust Associates, Inc., In re

• Decision Date: 20 August 1996
• Docket Number: No. 77600,MID-AMERICA,77600
• Citation: 927 S.W.2d 855
• Parties: In reLIVING TRUST ASSOCIATES, INC., et al., Respondents.
• Court: Missouri Supreme Court

Page 855

927 S.W.2d 855

In re MID-AMERICA LIVING TRUST ASSOCIATES, INC., et al., Respondents.

No. 77600.

Supreme Court of Missouri,

En Banc.

Aug. 20, 1996.

John E. Howe, Carl Schaeperkoetter, Jefferson City, for Informant.

William R. Pearcy, Chesterfield, for Respondents.

PRICE, Judge.

This action was brought by the Chief Disciplinary Counsel (CDC) against respondents Mid-America Living Trust Associates, Inc., and Robert Dillie. The CDC seeks a declaration that respondents have engaged in the unauthorized practice of law and injunctive relief. The CDC has alleged, in particular, that respondents have: 1) rendered legal advice to individuals concerning the need for and advisability of various types of living trusts; 2) gathered information from individuals for use in determining what type of trust is appropriate and in preparing trust documents; 3) prepared trust documents for individuals; 4) prepared other legal documents including wills and durable powers of attorneys for individuals; and 5) that Mid-America charged and collected fees for these services.

This Court has the inherent authority to regulate the practice of law. Mo. Const. art. V, § 1. In re First Escrow, Inc., 840 S.W.2d 839, 842 (Mo. banc 1992); Reed v. Labor and Industrial Rel. Com'n, 789 S.W.2d 19, 20 (Mo. banc 1990); In re Thompson, 574 S.W.2d 365, 367 (Mo. banc 1978).

I.

The parties have stipulated to the following facts. Mid-America is a closely-held Missouri corporation which prepares trusts, pour-over wills, durable and general powers of attorneys for individuals. Its president and 95 percent shareholder is Robert R. Dillie.

Mid-America works through trust associates that it defines as "independent contractors" to obtain clients. The trust associates are usually individuals with a financial planning business, insurance business, or stock brokerage business who have learned of Mid-America's services through education programs sponsored by Mid-America or advertising in trade publications. Trust associates may attend "Estate-Planning School", a training seminar put on by Mid-America, and all have signed a standard contract agreement. The contract includes a clause instructing the contractor to "[n]ot give any tax or legal advice to clients; make, alter or discharge any wills or trusts, incur any liability on behalf of Mid-America Living Trust Associates."

The "trust associate" who recommends and sells a living trust also gathers personal and financial information from the client by completing a workbook provided by Mid-America. Clients may choose their own attorney or an attorney recommended by Mid-America who has agreed to review trust documents. If a Mid-America review attorney is selected by the client, the trust associate directs the client to make out two checks: one to Mid-America and one to the review attorney. The workbook and the checks are mailed to Mid-America.

Mid-America paralegals contact the client and verify the information in the workbook. The paralegals, based on input from in-house counsel, the review attorney, or personal experience, decide which form of trust would be the most appropriate and draft the initial documents from blank prototypes. The prototypes include forms for single and married persons in community and noncommunity property states. The marital trust prototype includes joint marital trust documents and separate trust documents. There are documents for estates having tax consequences and forms for pour-over wills, durable and general powers of attorney, health care declarations, and health care powers of attorney.

The trust documents, workbook, and attorney check are then mailed to the review attorney. The review attorney sometimes communicates directly with the client, but not always. The paralegal makes changes if directed to by the attorney. The documents are then mailed to the trust associate, who delivers the documents for execution by the client. Mid-America also provides assistance in retitling assets and preparing quitclaim deeds.

A majority of the 125 to 200 estate-planning packages prepared each month by Mid-America are for execution in Florida, Texas, Arizona, California, and Hawaii. Since its creation in 1989, approximately 250 trusts have been prepared by Mid-America for execution in Missouri. Mid-America has utilized three Missouri attorneys as review attorneys. The review attorneys have charged clients fees ranging from $100 to $250. The clients typically pay between $595 and $1,995 for Mid-America's services. Mid-America pays the trust associates a commission for each trust they recommend to Mid-America in accordance with a written schedule. A copy of this schedule was submitted to the Master as Exhibit C of the parties' stipulation and is appended to this opinion.

We derive other facts from the joint exhibits submitted by the parties. In the first page of the Training and Procedures Manual provided to all trust associates, Mr. Dillie "welcomes" Mid-America's trust associates to "our 'Family' of Associates" and encourages them "in [their] new business adventure--great success in the living trust industry." The manual and a training video alone, according to the manual, explain what a trust is, why trusts are beneficial, how to complete the estate plan, and, particularly, "how to make a successful sales presentation and close a sale." The manual explains how to fill out the workbook and gives a brief synopsis of the legal issues the client should be aware of when selecting a trustee, personal representative, conservator, guardian, or the person to designate as a durable power of attorney. The manual explains different ways to distribute property or exclude relatives from the trust, as well as other important information. Significant differences between state laws are also highlighted.

The manual tells the trust associates to encourage the clients to choose one of Mid-America's review attorneys:

Have your clients list the attorney of their choice--for obvious reasons we hope they choose our recommended attorney--on the line provided.

(In the bizarre instance where the clients want their own attorney, explain that the trust will have to be sent to that attorney for review and they will be responsible for that attorney's fees, which could be substantially more than $100. If they persist, understand that this trust, if sent to their attorney, will very likely be canceled--since their attorney will probably offer to do the trust for them.)

The manual also instructs the trust associates not to share the name of the review attorney with the client unless they specifically request it, to avoid "any unlawful solicitation on behalf of the attorney." According to one of the trust associates questioned, the clients are instructed to make their checks out to "Review Attorney." The clients are instructed to sign an "Attorney Representation" form stating that the client recognizes "[a] potential conflict of interest between the Corporate Attorney's preparation of my/our estate documents and his representation of Mid-America exists and I/we consent thereto." The clients also sign a "Disclosure and Compliance" form which states that "I/We understand that the representative is not an attorney or certified tax authority, and I have been advised to consult an attorney and/or tax accountant for tax or legal advice."

II.

The Honorable Floyd McBride, Circuit Judge, was appointed Master in this case. Judge McBride entered an extensive thirteen page Revised Report of Master, Findings of Fact and Conclusions of Law. Judge McBride's ultimate conclusion was:

Your master finds that a permanent injunction is appropriate under all of the circumstances, particularly since Mid-America intends to continue doing trust business in this state and injunctive relief is necessary to insure that respondent's business practices comply with the clear rule of law established by this Court in [ State ex inf. Miller v. St. Louis Union Trust Co., 335 Mo. 845, 74 S.W.2d 348 (banc 1934) ]. Further, reasons grounded in the public welfare call for strict enforcement of the subject statutes against unlicensed persons who engage in the "law business." Miller, supra, 74 S.W.2d at 359.

The undersigned master recommends that the conduct to be enjoined shall include:

1. The soliciting, counseling, recommending and selling of trusts to Missouri residents by Mid-America's nonlawyer agents, servants and employees;

2. The drawing, preparing or assisting in the preparation of trust workbooks, trusts, wills and powers of attorney for residents of this state by Mid-America's nonlawyer agents, servants and employees without the participation or direct supervision of a licensed attorney; and

3. The charging and collecting of fees for the services enjoined hereinabove.

The undersigned master further recommends that the information be dismissed as to Respondent Robert R. Dillie.

III.

It is the responsibility of the judiciary to determine what constitutes the practice of law, both authorized and unauthorized. Mo. Const. art. V, § 1; Reed, 789 S.W.2d at 20. In exercising this responsibility, we recognize that:

The duty of this Court is not to protect the Bar from competition but to protect the public from being advised or represented in legal matters by incompetent or unreliable persons.

In re First Escrow, 840 S.W.2d at 840 (quoting Hulse v. Criger, 363 Mo. 26, 247 S.W.2d 855, 857-58 (1952)). The consequences of incompetent representation are especially dangerous because they are often invisible for many years, but then cause great hardship and expense, such as when a deed, will, or trust is found to be ineffective or not to achieve the results originally intended. Accordingly, we seek to allow only those who have been found by investigation and examination to be properly prepared and skilled to practice law and who demonstrate that they conform to higher standards of ethical conduct necessary in fiduciary and confidential...