• Sun. Dec 10th, 2023

Rhode Island Lawyers Weekly: Business Succession Planning and Attorneys’ Obligations under Rule 5.4(d)(1)


Nov 20, 2023

A Rhode Island attorney has sought clarification from the Panel on whether they are allowed to transfer their law firm equity interest into a revocable trust as part of a business succession plan. The attorney practices law through a limited liability entity and owns an equity stake in the firm. They wish to continue owning the equity interest during their lifetime while also complying with the Rules of Professional Conduct.

The Panel has ruled that an attorney may own their law firm equity interest via a revocable trust, provided that they are the sole trustee and both the successor trustee and beneficiary are also licensed Rhode Island attorneys in good standing. The panel found guidance from other states which make it clear that non-lawyers are not allowed to have any kind of ownership interest in a law firm via a revocable trust. Therefore, all ownership interests at all levels of the trust must be held by licensed Rhode Island attorneys in good standing for compliance with Rule 5.4(d)(1). As such, the attorney may transfer their equity stake in their law firm into a revocable trust, as long as all parties involved meet these criteria.

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