A trustee is a person who manages a trust for the people who will benefit from it. These people are called beneficiaries. Think of a trustee as someone who holds and watches over money or property for others.
In Arizona, a trustee must act in good faith. This means they must be honest and fair. They must use reasonable care, skill, and caution when making decisions. Most importantly, they must always put the beneficiaries’ interests first.
The trustee must manage the trust property wisely. They cannot be careless with investments or decisions. They need to keep good records and communicate with beneficiaries about what’s happening with the trust.
The trustee must avoid conflicts of interest. They cannot use the trust property for their own benefit. This is called self-dealing, and it’s not allowed unless special exceptions apply. For example, a court might approve it, or all the beneficiaries might agree to it in writing.
The trustee must follow the trust document. Every trust has terms that explain how it should work. The trustee must stick to these terms and make sure everything they do fits with the trust’s purpose.
When someone becomes a trustee, they become a fiduciary. This is a legal term that means they have a very high duty of care. It’s one of the highest standards of care that the law requires.
As a fiduciary, the trustee cannot put their own interests ahead of the beneficiaries. They must be loyal to the trust. If they make a mistake or act carelessly, they can be held responsible. They might have to pay back any losses from their own pocket. This is known as a breach of fiduciary duties, and it can have serious legal and financial consequences for the trustee.
This standard applies to everyone who serves as a trustee. It doesn’t matter if they’re a family member, a friend, or a professional like a lawyer. The rules are the same.
Should My Attorney Act as a Trustee in Arizona?
You can appoint your Arizona lawyer to serve as your trustee. Many people like this idea because lawyers understand the law. They know how to handle legal documents and make complex decisions. But this choice comes with some important considerations. The decision to have an attorney as trustee comes with both benefits and risks.
Benefits of Having an Attorney as Trustee in Arizona
A lawyer brings legal knowledge to the role. They understand how trusts work under Arizona law. They know what duties they must follow. They can spot legal problems before they become serious.
Lawyers are used to handling documents and keeping records. These skills are helpful when managing a trust. They also understand how to communicate with beneficiaries in a professional way.
If legal issues come up with the trust, a lawyer-trustee can often handle them directly. This might save time and money for the trust.
Arizona Disclosure Requirements for Attorney Trustees
Arizona law requires lawyers who become trustees to make an important disclosure. They must tell all adult beneficiaries in writing if they have ever represented anyone who has an interest in the trust. This includes past and current legal work.
This disclosure must happen within a reasonable time. The goal is to make sure everyone knows about any connections the lawyer has. These connections could affect how the lawyer handles the trust.
For example, imagine your lawyer has represented your brother in the past. If your brother is also a beneficiary of your trust, the lawyer must tell all the other beneficiaries about this relationship. This helps everyone understand if there might be any conflicts.
Having an Arizona estate lawyer serve as trustee can work well in some situations. If your trust is complicated, you might want someone with legal training. If you don’t have family members who can serve, a lawyer might be a good choice.
Some people choose a lawyer as trustee because they want a professional who won’t be emotionally involved. Family members sometimes have a hard time being fair when feelings get involved. A lawyer can be more objective.
What Potential Conflicts Arise When an Attorney Acts as a Trustee in Arizona?
Conflicts of interest are situations where a person’s personal interests might interfere with their duty to someone else. When a lawyer becomes a trustee, several types of conflicts can happen.
Self-Dealing and Related Party Transactions
Self-dealing means using trust property for your own benefit. Arizona law presumes that certain transactions create conflicts. These include any deals between the trust and the trustee’s family members. They also include deals with the trustee’s business partners or companies they own part of.
Here’s an example. Say your lawyer is the trustee of your trust. The trust owns a house. The lawyer’s spouse wants to buy the house. This transaction is presumed to be a conflict of interest. Even if the price is fair, it looks like the lawyer is helping their family instead of the beneficiaries.
The law makes this presumption to protect beneficiaries. The trustee would have to prove the transaction was fair and proper. This can be hard to do.
Conflicts When Attorneys Represent Multiple Trust Parties
Another conflict happens when a lawyer represents more than one person connected to the trust. Maybe the lawyer represents both you (the person who created the trust) and one of your beneficiaries. Or maybe they represent two beneficiaries who might have different interests.
This dual representation can compromise the lawyer’s ability to be fair. As a trustee, they must treat all beneficiaries fairly. But as a lawyer, they might have duties to their client that conflict with this.
Imagine your trust has two children as beneficiaries. The lawyer represents one child in a business matter. As trustee, the lawyer must be fair to both children. But they might feel pressure to favor the child who is their client. Even if they try to be fair, it creates a difficult situation.
Attorney Ethics vs. Trustee Duties in Arizona
Lawyers have professional rules they must follow. These are called attorney ethics rules. Sometimes these rules can conflict with the duties of a trustee.
For example, lawyers must keep client information confidential. But as trustees, they must communicate openly with beneficiaries. What if a beneficiary asks for information that the lawyer thinks is confidential? This creates a tension between two different duties.
The Appearance of Impropriety
Sometimes a conflict exists just because something looks wrong, even if nothing bad is actually happening. When lawyers serve as trustees, beneficiaries might worry that the lawyer is favoring certain people. This can happen even if the lawyer is being completely fair.
This appearance of impropriety can damage trust. Beneficiaries might question every decision. They might hire their own lawyers to watch what the trustee is doing. This creates extra costs and stress for everyone.
What Must Attorney Trustees Disclose in Arizona?
Because of these potential conflicts, Arizona law requires lawyers to disclose their relationships. They must tell beneficiaries about any current or past representation of people with an interest in the trust. Getting an Arizona lawyer consultation about these disclosure requirements can help you understand what information must be shared and when.”
This disclosure helps beneficiaries understand what conflicts might exist. They can then decide if they’re comfortable with the situation. If they’re not, they can take action, such as asking a court to remove the trustee.
How to Resolve Trustee Conflicts of Interest in Arizona
Not all conflicts are fatal. Arizona law allows trustees to engage in some transactions that would normally be conflicts if certain exceptions apply. A court can approve the transaction. Or all the beneficiaries can agree to it in writing after full disclosure.
But getting these exceptions requires extra steps. It’s not automatic. The trustee must be upfront about the conflict and get proper approval before moving forward.
In Arizona, if I Appoint My Attorney as My Trustee, Do They Have To Accept?
No. Your lawyer does not have to accept the role of trustee just because you appoint them. This is true even if you name them in your trust document.
Can an Attorney Refuse to Be a Trustee in Arizona?
Under Arizona law, anyone named as a trustee can reject the role. They can simply not accept it. They must make this decision within a reasonable time after learning they’ve been appointed.
What’s a reasonable time? The law doesn’t give an exact answer. It depends on the circumstances. But the person should not wait too long. If they wait months without saying anything, they might be seen as having accepted the role.
How Attorneys Decline Trustee Appointments in Arizona?
A lawyer (or anyone else) can reject being a trustee in a few ways. The clearest way is to notify you or the beneficiaries in writing. They should say clearly that they’re not accepting the position.
They can also reject it by simply not acting as trustee. If they don’t take control of the trust property and don’t perform any trustee duties, they haven’t accepted the role.
Protecting Trust Property Without Accepting Trustee Role
Sometimes, a person might need to do something to protect the trust property while deciding whether to accept. Arizona law says they can do this without it meaning they’ve accepted the full role of trustee.
For example, imagine your lawyer is named as trustee. They learn that the trust owns stock that needs to be sold quickly. They might take steps to protect that stock while they decide if they want to be the trustee. As long as they notify you or the beneficiaries that they’re rejecting the role within a reasonable time, these temporary actions don’t trap them into being the trustee.
How an Attorney Accepts the Trustee Position in Arizona?
On the other hand, a lawyer accepts the trustee role by substantially complying with the trust’s terms. This might mean taking delivery of trust property. It might mean starting to perform trustee duties, like investing money or communicating with beneficiaries as the trustee.
The key is that their actions show they’re taking on the responsibilities of a trustee. Once they do this, they’ve accepted the role and must follow through with all the fiduciary duties.
Should I Hire Another Lawyer if I Wish To Appoint an Attorney as My Trustee in Arizona?
Don’t wait until there’s a problem to get advice. The best time to think through these issues is when you’re setting up your trust or choosing a trustee. Once problems develop, they’re much harder and more expensive to fix.
Reach out to an independent Arizona estate lawyer through LegalMatch today. Explain that you’re considering appointing a lawyer as your trustee. Ask them to review your situation and give you advice. This simple step can save you and your family from serious headaches in the future.
A good lawyer will take the time to understand your family situation. They’ll explain your options clearly. They’ll help you make a decision that works for your specific needs. And they’ll make sure everything is documented properly so your wishes are carried out the way you intend.
Remember, choosing a trustee is one of the most important decisions you’ll make when creating a trust. The trustee will have control over your property. They’ll make decisions that affect your beneficiaries for years to come. Taking the time to get it right is worth the effort.
