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Your Client Has Been Named Trustee; Does He Really Need An Estate Attorney?

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Your Client Has Been Named Trustee; Does He Really Need An Estate Attorney?
Posted on: February 6, 2018
By Hallie L. Zobel, Esq.

A client recently terminated me as his attorney of his mother’s trust. I found it interesting that his decision came the day after he met with his financial advisor. Perhaps it was a total coincidence! After all, it is difficult for me to believe that a client would have been given advice from another professional that is likely to save him a few hundred dollars now, but cost him thousands later. A financial advisor’s practice is built upon their ability to guide their clients in making the most of their wealth. My practice is built upon my ability to legally protect that wealth.

In any case, it made me realize that I have a great opportunity to explain why a trustee needs to have an attorney on their side from the beginning. Yes, even in cases where everyone gets along, and is one big happy family.

Trust administration is much more than just distributing checks to the beneficiaries. In complicated situations, we generally advise the family to use a professional trustee. In situations that are not so complicated, wherein a trustee is easily selected and ready to assume their duties, we still advise them to retain our services for guidance and oversight.

We always advise our trustees to keep a detailed log of their work, for starters. Their tasks, among other things, require: that they provide copies of all pertinent legal documents; that they marshal assets and inventory the trust; arrange for appraisals of real property; handle yearly and final accountings; determine creditors and pay proper claims…and that’s just a partial list of their tasks!

Trust law is not simple; no matter how straightforward the trust in question is, or how well family members communicate, there is bound to be something somewhere along the way that your client’s favorite sister may be willing to sue him over. Money makes people do crazy things, especially when there’s a large sum of it.

Let me give an example from a case five years ago. A gentleman hired us after being served with a notice that he was being sued. He never saw it coming, because as far as he knew, he was executing his duties exactly as outlined in his parents’ trust. The details are not important, but he did his duty in good faith and distributed 90% of the trust funds within a few months as he believed he ought to have done. Unfortunately, this gentleman didn’t know what he didn’t know, and his sibling sued him. Not only did his sibling sue him, but he did his best to drag the case out and drown his brother in legal fees – he was out over $40,000 when it was all said and done.

Even if we remove the fear of being sued, a trustee can really benefit from having an attorney be the “bad guy.” Especially if they are dealing with siblings who wish to argue what the trustee needs to do or doesn’t need to do! This can be an enormous burden off of the trustee. They do not need to second-guess their interpretation of the law or carry around the stress of explaining to their family (who may be scattered across several states) why and how they are performing their duties as they are. They are able to simply say, “The attorney is very experienced in this matter, and it needs to be done this way.” Remember, the trustee has a fiduciary duty to act in the best interest of others, and sometimes this can be a gray area-yet another reason to have an attorney on your side.

Is there a case in which your client, the trustee, would probably not really need an attorney? What if they are an only child? Well, I suppose yes. If they are an only child who is an attorney, they can probably handle things perfectly! Even being an only child doesn’t remove the risk of a creditor who might have been unintentionally unpaid and has the ability to pursue a lawsuit.

My partner and I are always happy to take our Cookies & Counsel™ on the road! If you believe we could provide insight for general concerns your clients are facing, please call our office, and we’d be happy to arrange a session with you and your colleagues.

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