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A Trust Lawyer May Not Defend Trustee as a Beneficiary

Should a Trustee have one or two attorneys that represents them in a litigated trust matter?  Let me give an example. You have a Trustee after Mom and Dad have passed away and the Trustee is administering the Trust as the Trust terms state.  But, maybe the Trustee’s brother and sister don’t agree with the things that the Trustee is doing.  And they end up filing a lawsuit against the Trustee for breach of fiduciary obligation.  In other words, they’re saying the Trustee has not followed the Trust terms, the Trustee has damaged the Trust assets to some extent.

 

 

Well, this is a very serious charge against the Trustee.  And so the Trustee has a little bit of a predicament with who do they have represent them in the claims that the Beneficiaries are making against the Trustee?

Probably, the Trustee already has an attorney that’s been hired to represent them in their capacity as Trustee.  And that is good.  Because that attorney will help the Trustee file all required tax returns, to marshal all the assets, to pay off the liabilities, to do a proper accounting, to get distribution ready, to get waivers if waivers are needed.  Those are the types of things that a Trust Attorney will do for that Trustee.

But that Trust Attorney should not be defending the Trustee against the attacks of the Trust Beneficiaries.  Because of the conflict of interest that arises there.  The Trustee must treat all the Beneficiaries equally, and more than likely, the Trustee is a Beneficiary themselves, and so, they’ll need to get an attorney that represents them in their own beneficial interest, because they’re being attacked personally, not as Trustee, but individually, for failing to follow the Trust terms.

And so while it’s a little complicated in its analysis, ultimately a Trustee, if they’re being attacked by the Trust Beneficiaries, should maintain the relationship that they have with their Trust Attorney to help with the Trust Administration, but should hire an independent lawyer to represent themselves against the allegations that are made against them by the Beneficiaries.