Attorney as Trustee
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Should an Attorney Act as My Trustee?
Since trusts are regularly drafted by attorneys, it may seem convenient for the client to appoint a drafting attorney as a trustee. However, a number of ethical risks may potentially arise.
What Potential Conflicts Arise when an Attorney Acts as Trustee?
Trusts usually include exculpatory language that protects trustees from liability. This may form the basis of potential ethical violations for attorneys who draft the trust. Consider the following:
- The Model Rules of Professional Conduct caution attorneys against making agreements that prospectively limit their liability.
- Any terms exculpating an attorney-trustee may be ineffective if the client doesn't receive independent advise concerning the term(s) and the term(s) are not fully disclosed to the client.
- If an attorney-trustee includes exculpatory language through abuse of confidentiality or fiduciary duties, that language will be deemed ineffective.
Double Compensation Limits: What Does This Mean to an Attorney?
Trustee compensation for trust management may be limited when the drafting attorney is a trustee. Otherwise, from the client's point of view, an attorney would have been compensated as a counsel as well as a trustee. On the other hand, from an attorney's point of view, limits on compensation spill into more work for less money. So, it may not be profitable for an attorney to also serve as a trustee.
Preventing Ethical Violations
The following may help mitigate potential ethical conflicts resulting from the attorney-trustee situation as well as from the inclusion of exculpatory terms in the trust. Prior to making your attorney a trustee, you should:
- Seek independent legal advice
- Provide voluntary, informed, written consent to your attorney
- Make sure exculpatory terms are fair and that you fully consent to them
Should I seek More Help from an Attorney?
All the parties involved in trust creation and administration may benefit from qualified estate planning attorney advice. An attorney can draft trust documents, address potential conflicts, and help resolve trustee compensation issues.
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Last Modified: 06-10-2014 04:03 PM PDT
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