A lawyer inquired about implementing a business succession plan in which the law firm’s equity interest would be transferred to a revocable trust. The lawyer wanted to know whether the Rules of Professional Conduct allow for such a plan, and if so, whether ownership interests at all levels of the trust must be held by licensed Rhode Island attorneys in good standing.
It is the Commission’s opinion that a lawyer may own his or her equity interest in a law firm through a revocable trust, as long as he or she is the sole trustee and the successor trustee and beneficiary are also licensed Rhode Island attorneys in good standing. However, this is subject to certain conditions. The Commission finds guidance from other states on this issue, which makes it clear that ownership interests in all levels of the trust must be held by licensed Rhode Island attorneys in good standing.
Therefore, an inquiring attorney may transfer his equity interest in his law firm to a revocable trust, so long as all trustees, heirs, if any, and beneficiaries are licensed Rhode Island attorneys in good standing. It is important for lawyers to carefully consider their options and seek legal advice before making any decisions regarding their business succession plans.