Can a Trust’s Lawyer Also Act as the Trustee?
CAN A LAWYER WHO SERVES AS TRUSTEE OF A REVOCABLE/FAMILY TRUST ALSO REPRESENT THE TRUST AS LEGAL COUNSEL?
Like many legal questions, the answer here is “maybe, depending on facts and circumstances.”
Assuming there are no conflicts of interest, or that any conflicts of interest that can be waived have been properly waived by all relevant persons: generally speaking, a lawyer can serve as both the trustee of a revocable trust and legal counsel to the trust in the following circumstances:
- Where the lawyer is also the settlor (or one of the settlors) of the trust
- Where the trust instrument specifically provides for this situation (and where the lawyer has no conflict of interest in doing so)
- Where the attorney’s fees for serving as legal counsel (as opposed to trustee fees) are approved by the probate court, or where proper consent/approval is given by all relevant persons**
- Where the law specifically permits
** In some cases, from an abundance of caution, the attorney filling dual roles may seek approval for all compensation received, including trustee compensation.
It’s important to note that conflicts of interest can be a serious problem when a lawyer fills more than one role on behalf of a client. While theoretically the fiduciary duties of the trustee and the lawyer for a trust overlap, and should be very similar (if not identical), there is also a large risk of double payment, or overpayment, when the same person fills two roles and is compensated for each.
Moreover, in situations where the trustee has sole responsibility for, and power to, approve and pay trust expenses, a conflict of interest may arise when the trustee also serves as legal counsel to the trust, in that the same person is responsible for creating the lawyer’s bill and paying it. For this reason, court supervision of attorney fees is appropriate.
However, if carefully managed, there are benefits to this “dual-hatting” too. For example:
- an experienced lawyer may have more understanding of trust procedures (and court procedures) than a non-lawyer trustee
- leading to faster administration time, smoother procedures, and lower costs
- the total costs may be lower than hiring both a professional trustee and legal counsel
- especially if the trustee lawyer is willing to adjust the relevant fees or agree to a reasonable cap
- interpersonal issues that often arise between trustees and beneficiaries may be avoided by using a neutral third party as both counsel and trustee
That said, it is always risky to have one person serving two roles with regard to a trust, particularly where those roles traditionally supervise one another (if only informally).
If you are the beneficiary of a trust and believe the trustee/lawyer may not have acted ethically with regard to fees, consult an attorney promptly for an evaluation of your legal rights. (You may lose the right to object, quite quickly, if you delay.)
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Disclaimer: THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY, AND DOES NOT CONSTITUTE LEGAL ADVICE OR CREATE AN ATTORNEY-CLIENT RELATIONSHIP BETWEEN THE AUTHOR OR ROSS LAW AND ANY PERSON. Your legal rights and experiences may vary. Never use an online article (including this one) to evaluate your legal rights or claims. Consult an experienced attorney promptly to obtain a personalized evaluation of your claims, potential damages, and the various legal rights and options available to you.
You may lose or compromise your rights if you delay in consulting legal counsel. Most legal claims (and defenses), as well as legal and court procedures, are complicated and fact-dependent. If you believe you have a claim against someone who injured you, a lawyer who represented you in a previous lawsuit, or any other legal claim, consult an experienced lawyer immediately for an evaluation of your individual rights and claims.
