Look, the only shady thing here is that she wants to pull a fast one on the county. 

If a set of drawings get submitted & permitted and something else gets built, the inspector should catch it. Now, if you've done the drawings for both, that's a different matter. You should mark all drawings "not for construction" (for this client) unless you actually plan on submitting them for permit. I wouldn't worry too much at this point, any schematic level drawings you've done are just schematic. Everyone knows that loads of designs don't make it out of the SD phase. 

With that said, there's nothing wrong with designing something that is not allowed by zoning. I'm guessing that the MIL unit is not allowed by zoning. When the drawings get submitted for permit, the building dept will simply not issue the permit. They may ask you to get a variance first. 

Question: is it a freestanding MIL unit, or actually connected to the house? Many jurisdictions will allow as many bedrooms, bathrooms & kitchens as you want (inside the home). They get annoyed when you build a separate unit (including if it's a single building and a door separates them). 

Now, say your owner wants to do it anyway. You have a couple of options:

1) go for a variance - get permission from planning &/or zoning to actually build the MIL unit. this is the best way. 

2) build the unit inside the main home, but not have it separated. 

3) same as #2 but the owner installs a door or wall later on, long after you've left the project. We all know they'll do it anyway. 

4) find another building type that the county will allow. Do they allow pool houses? Some sort of accessory dwelling structure? some sort of recreational structure? Do you know what zoning says? 

I suggest you guide the owner through the variance process, or design something that is permittable. 

Now, you have to decide what you are doing. You are not an architect, but you are also more than a 'creative dabbler'. Are you going to guide the client through a design, permit and construction process or are you just trying to give the client some design ideas? It sounds like you are going further than you are comfortable or skilled with. If the client is expecting a permittable set, and you can't provide it, then you're just taking their money. 

I always start with a review of what zoning says. That way, you can discuss issues up front with the owner. And, if they want to do something that's not allowed by zoning, I tell them right away so they're not surprised when the AHJ comes back to them asking for a variance or rejecting the idea outright. If I think they won't get a permit in any circumstance, I'll tell them and possibly even turn down the job. If I do take the job, I try to always have a back pocket idea that I can use in case the preferred design does not work. 

"Shady intentions" usually means trying to get out of paying you.

Design whatever they want, document their requests and your advice re: code etc. and build a file that will support your claim for payment when it blows up in their face because they will no doubt blame you.  Keep you billings under the small claims cap so you can initiate collection without a lawyer and don't extend yourself beyond that.

Thanks gruen, that's helpful. It is all within the same structure, would basically be a small basement apartment for rental. Client is convinced we need an interior stair to show the county that it would be single-family, but the stair is becoming a huge factor in the design, not to mention closing it off. I have read the zoning and not seen anything prohibiting MIL - as far as I can tell, all they care about is height and footprint. I would love to just ask them straight out, but client is adamant they won't allow it - honestly, I am starting to think she is just after some excitement with the whole thing. I have been clear that this pretty much stops at SD and will not be a buildable set of drawings, and I back away a little further every time she mentions sneaking it past the county. But the more she talks about the whole scheme, the more I wonder if professional conduct doesn't require me to walk away entirely, not merely avoid interacting with the county around the design.

Why don't you just make an anonymous call to the building department and ask a hypothetical question. Even if they want to know your name, you need not tell them about your client or that you have a specific site in mind. Tell them you're just doing some preliminary research for a prospective client who is kicking some ideas around in connection with a few properties he's considering buying. 

i think you have an ethical responsibility to do your best to try to understand building code requirements and zoning requirements, and design to meet those requirements.  you're not an architect, but as an aspiring architect i would think you would want to avoid deliberately acting outside the legal requirements associated with designing this project, as that's pretty much fraud.  it's not really the plans examiner's responsibility at the city to tell you how to do your job, it's your responsibility to know how to do your job.  if you're an aspiring interior designer or something, then whatever.  i'm sure nobody would expect competence anyway.

there are code requirements for a bedroom in a basement, regarding windows and exits and such.  read the residential code book and become comfortable with those requirements.  you're getting into life safety issues.  the rental thing actually brings in other legal requirements that are probably outside an architect's scope.  a mother-in-law probably wouldn't have the same renter's rights as a renter.

also, re: cya, it sounds like you've already communicated with your client about how you want to distance yourself from their attempts at fraud.  for every written piece of communication where they say they are going to knowingly violate the law, i would want a piece of written communication telling them to not do that, or saying you wouldn't advise such a course of action, or something like that.

Could you do the additional design work (and get paid for it) with the understanding between you and the client that (you are getting paid for the work)  the additional work will require a variance be granted for construction.  Then it's up to them (and their builder) to follow through with the variance approval and all of that associated business.

If they don't get the variance and they build it anyway, the municipality can come along and fine them or order demolition. 

And if it gets built without any inspections (where shenanigans should be called out by the inspectors) - well who wants to live in a place that hasn't had proper inspections?

But you said this was a mother-in-law unit... maybe that's the idea.

Oh - and be sure you get paid for the additional work.

If there is no door between the two units then it is regarded as a single family dwelling. So if she is on one level and there is a stair don't  put doors on and well you have an in law apartment which meets the intent of the law.

Your first duty is to your client, not the building department.

"Your first duty is to your client, not the building department."

False.  Your first duty is to the public health, safety and welfare.  The building code is the minimum of that standard and the building department is the enforcement branch of those laws (they aren't suggestions).  Other parts of that branch include your licensing board, who can deny you ever being licensed if you knowingly violate the code of ethics.  It can get into criminal law if something seriously goes wrong.  You aren't above the laws, nor are they forgiving on 'circumstances'. "I just hypothetically planned the escape route for that bank heist officer... They told me they were going to do it, but 'technically' I didn't pull the heist."  Good luck with that argument.

A secondary system is civil court; Usually only comes into play when there are damages like healthy, safety, welfare.. (oh, and not from just that client, but whomever owns the building after or a neighbor complaint or someone like the bank holding the note (the real owner)....).  At that point, they just need to prove (via those emails) that you knew and played a role in violating the minimum that the codes and laws set forth and that there is a damage... And I'm guessing uninsured.... So that means they'll come after you personally.

So, you are taking a risk for your future career and your own finances.  Not saying it IS going to happen or even likely, it just could be possible.  Is this client/money worth that risk? 

Think of it like blowing through a red light... chances are nothing is going to happen; But a lot of 'bad things' can happen outside of your control that can be a little as a slap on the wrist, or really bad like a accident.  Your choice, but you need to understand it...

Duty to the client means protecting their health and safety. It's all one and the same.