Ethics Hotline & Opinions

ETHICS DOCKET NO. 2011-03

MARYLAND STATE BAR ASSOCIATION, INC.

COMMITTEE ON ETHICS

ETHICS DOCKET NO. 2011-03

Ethical Considerations in Consolidating Insurance Trust Accounts

 

  The Ethics Committee of the MSBA is in receipt of your request for a formal Opinion regarding your representation of numerous insurance trusts. You indicate that you currently maintain separate attorney trust accounts, but inquire as to whether you may ethically consolidate the funds of several trusts into one account while maintaining separate accountings for the assets of each trust.

  Chapter 600 of the Maryland Rules, regarding Attorney Trust Accounts, specifically excludes fiduciary accounts maintained by an attorney as a trustee or under a written instrument. The Committee believes that your duties as a trustee and as a fiduciary are governed by the Maryland case law, statutory law and the language of any applicable documents. Under our Guidelines, which are published on the MSBA Ethics website, we may only provide opinions regarding ethical issues.

  The Committee does not believe that there is any specific ethical prohibition against the consolidation of such accounts, if otherwise legally permitted. Rule 1.15 of the Maryland Rules of Professional Conduct provides the general rules that an attorney must be governed by when addressing issues of safekeeping the property of clients or third persons. Footnote 1 to said Rule states that “Separate trust accounts may be warranted when administering estate money or acting in similar fiduciary capacities.” It would appear to the Committee that a consolidation could create requirements of record keeping beyond those required by separate accounts. It is the Committee’s opinion that although there may be no specific ethical prohibition against consolidating the accounts, the determination to do so must be made after considering your legal duties as a trustee and fiduciary, and, that if such action is legally permitted, then the requirements of Rule 1.15 and any other applicable ethical rules must be complied with.

  Thank you for consulting the Committee on Ethics.

 

REFERENCES:

  • MRPC, Rule 1.15

  • Maryland Rules, Rule 16-601, et. seq.

 

ASSIGNED TO: Steve Rosen

DATE ASSIGNED: September 10, 2010

DATE DISTRIBUTED: December 5, 2010 

 

DISCLAIMER: Opinions of the Maryland State Bar Association (MSBA) Ethics Committee are an uncompensated service of the MSBA. This Committee’s opinions are not binding on the Maryland Court of Appeals, Maryland Attorney Grievance Commission, MSBA or this Committee. The reader is advised that subsequent judicial opinions, revisions to the rules of professional conduct, and future opinions of this Committee may render the Opinions stated herein outdated. As such, the Committee’s opinions are advisory only and neither the Committee nor the MSBA assumes any liability whatsoever with respect thereto. Accordingly, reliance upon the opinions of this Committee is solely at the risk of the user.