Attorneys as Trustees of Living Trusts

Many clients question whether or not their attorney can be their trustee.  Often this question raises other questions of ethics, conflict of interest and fiduciary duty. Choosing your trustee is a very significant decision. It is ultimately up to you.

Why would an attorney be a good choice?

A trust is more than a simple contract.  Instead, it is a transfer of power or authority over your personal and financial affairs to someone else to handle.  As such, your trustee must be knowledgeable and competent, as well as trustworthy.  For these reasons, at the very least, an attorney can be a very proficient advisor to your trustee.  Also, an attorney will have the specialized skills and experience that can be extremely valuable to a trustee, especially where a trust agreement is involved.

Attorneys are ideal fiduciaries

An attorney is often an obvious choice for a fiduciary, that is, a person who has the power and obligation to act on behalf of another.  They must act under circumstances that require “total trust, good faith and honesty.”  In fact, maintaining that fiduciary relationship with clients is required of all attorneys.  The fiduciary duty includes protecting a client’s confidences and property, avoiding conflicting interests, dealing honestly, and not taking advantage of the attorney-client relationship. However, Deb has chosen not to act as a trustee in her clients’ trusts when asked.

Ethical issues to consider

One point of concern for clients is whether there would be any potential ethical issues. There is nothing inherently wrong with an estate planning attorney serving as trustee of a client’s living trust, other than the normal ethical considerations every attorney must bear in mind.  Possible conflicts of interest are often resolved simply by making certain disclosures to the client.  Your estate planning attorney should be familiar with the professional ethics requirements in the area where he or she practices, and should be able to prevent any possible issues before they arise.

Can attorneys request to serve as trustee?

It is appropriate for an attorney to inform an estate planning client that he or she is available to serve as trustee of the trust the attorney assisted the client in creating.  However, the attorney must avoid self-interest, and present his availability as simply another choice for the client to consider.  In other words, the attorney still has a duty to recommend the best choice of trustee to the client, depending on that client’s particular situation, even when that best choice may not be the attorney. Deb will not serve as trustee, even when asked.

Providing informed consent can alleviate most issues

The best way to handle this situation is to provide the client with sufficient information to allow the client to give “informed consent.”  This means the attorney must communicate to the client all of the possible issues that could arise, if she were to serve as trustee, as well as all of the other choices available to the client.  Once this information is provided and understood by the client, and he or she agrees to the attorney serving as trustee, informed consent has been given.

If you have questions regarding a living trust, or any other estate planning needs, please contact Wilcox Attorneys, PA online or by calling us at (479) 443-0062.