Juan C. Antunez, writes about the issue of whether a trustee’s lawyer owe fiduciary duties to the trust’s beneficiaries , focusing on a case under Florida law decided by the 11th Circuit Court of Appeals, Bain v. Mcintosh, — Fed.Appx. —-, 2015 WL 859481 (11th Cir. March 02, 2015).

Mr. Antunez’s article begins as follows:

“But to say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary? In what respects has he failed to discharge these obligations? And what are the consequences of his deviations from duty?” – Justice Felix Frankfurter, SEC v. Chenery Corp., 318 U.S. 80, 85-86 (1943)The nature and extent of the fiduciary duties — if any — owed by the lawyer for a trustee or personal representative to the beneficiaries of the trust or estate has always been a hot topic. The “traditional” view in most jurisdictions is that the attorney’s fiduciary duties extend only to his client — not the beneficiaries. This view was adopted in ABA Formal Opinion 94-380 and it’s reflected in Goldberg v. Frye, a California appellate opinion that thoughtfully explains why the limitation makes sense:

“Particularly in the case of services rendered for the fiduciary of a decedent’s estate, we would apprehend great danger in finding stray duties in favor of beneficiaries. Typically in estate administration conflicting interests vie for recognition. The very purpose of the fiduciary is to serve the interests of the estate, not to promote the objectives of one group of legatees over the interests of conflicting claimants. [Citation.] The fiduciary’s attorney, as his legal adviser, is faced with the same task of disposition of conflicts. It is of course the purpose and obligation of both the fiduciary and his attorney to serve the estate. In such capacity they are obligated to communicate with, and to arbitrate conflicting claims among, those interested in the estate. While the fiduciary in the performance of this service may be exposed to the potential of malpractice (and hence is subject to surcharge when his administration is completed), the attorney by definition represents only one party: the fiduciary. It would be very dangerous to conclude that the attorney, through performance of his service to the administrator and by way of communication to estate beneficiaries, subjects himself to claims of negligence from the beneficiaries. The beneficiaries are entitled to evenhanded and fair administration by the fiduciary. They are not owed a duty directly by the fiduciary’s attorney. [Citations.]”

Again, this seems to be the generally accepted view. But, as always, there are exceptions. For example, in 1992 the Nevada Supreme Court observed in Charleson v. Hardesty that:

“[W]hen an attorney represents a trustee in his or her capacity as trustee, that attorney assumes a duty of care and fiduciary duties towards the beneficiaries as a matter of law.”

So what’s the rule in Florida? That’s the question at the heart of this case.

Read full post at 11th Cir: Does a trustees lawyer owe fiduciary duties to the trusts beneficiaries? | Florida Probate & Trust Litigation Blog.

 

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.