A trust is an agreement between you and your trustee, as to how to handle your assets and your personal affairs. Therefore, a trustee is a very critical part of the living trust. The trustee is ultimately the person who ensures that the terms of your trust are being followed. Typically, the trustee will be handling your financial affairs by paying your bills, making investments and maintaining accurate records of your finances. Naming an attorney trustee of your living trust, is always an option.
Is naming my attorney as trustee a good idea?
No question, when it comes to providing fiduciary services, an attorney is a good candidate. They have specialized skills and training which can be very valuable to their clients. The attorney who drafted the trust document would already be very familiar with the client’s family situation and financial affairs. If your attorney lacks specific knowledge, such as managing investments, he or she can certainly obtain further information or education in that area, or hire an expert to assist.
Are there any ethical considerations?
Generally speaking, there are no legal or ethical issues preventing an attorney from serving as a trustee. However, there are ethical considerations that must always be addressed anytime an attorney is serving in a fiduciary role. There may be certain disclosures that need to be made to the client. The attorney may also need to take steps to prevent certain conflicts of interest.
Attorneys must exercise professional judgment
When an attorney drafts a trust for a client, and discusses trustee options, the attorney is allowed to inform the client of his or her own availability to serve as trustee. However, the attorney cannot allow self-interest to interfere with the duty to recommend the best choice of fiduciary to the client. The attorney must also be careful not to violate any ethical rules regarding solicitation of clients or entering into a business relationship with a client. These rules are determined by the state bar where the attorney practices law.
The ethical concerns surrounding the solicitation of clients and providing independent legal advice are typically not an issue when the client, rather than the attorney, suggests the appointment of the attorney as trustee. However, is most situations, the client is unaware that his or her attorney can serve in this capacity. That is why the attorney has the burden of informing the client of this option, but nothing more. Of course, it is common for a client to be influenced by the fact that an attorney-client relationship already exists.
As long as the client receives “informed consent,” there should be no problem. “Informed consent” means, after the attorney has communicated to the client all of the possible risks and the available alternatives, the client agrees to a proposed course of conduct anyway. Your estate planning attorney should be aware of the applicable ethics rules for your state, regarding consent and disclosure.
If you have questions regarding trustees, or any other estate planning needs, please contact the Schomer Law Group either online or by calling us at (310) 337-7696.