Does the Trustee’s Attorney Also Represent the Beneficiary?
A trustee of a trust generally hires an attorney to represent him or her in administering the trust to ensure that they are administering the trust in accordance with Florida law. Confusion often arises when a beneficiary receives correspondence and/or documentation from the attorney on behalf of the trustee regarding the trust. Many beneficiaries believe the attorney represents not only the trustee, but also the beneficiaries unless the attorney makes it very clear in his or her correspondence whom the attorney represents.
In a recent federal case, Howard Walther, et al v. Steven Kane, et al, the United States District Court for the Middle District of Florida answered the narrow question of whether the attorney who is retained to represent only the trustee ALSO owes a fiduciary duty to the beneficiaries of a trust.
Patrick Walther (the “Trustee”) was the trustee of the James Walther Revocable Life Insurance Trust (the “Trust”). The beneficiaries of the Trust were Howard Walther and Dorothy Walther (the “Beneficiaries”). The Trustee hired Kane as his attorney. The court had a single issue. Did Kane owe a fiduciary duty to the Beneficiaries?
The court noted that the Florida legislature has expressed an unwillingness to expand an attorney’s fiduciary duties to anyone other than the trustee whom the attorney represents. Section 90.5021(2) of the Florida Statutes provides that only the person or entity acting as trustee is considered a client of the lawyer.
The court considered the Beneficiaries reliance on a 1990 case, In Re Estate of Gory, which stated “[w]e have no quarrel with the view that counsel for the personal representative of an estate owes fiduciary duties not only to the personal representative but also to the beneficiaries of the estate”. The court called this sentence “dicta” (basically language that is not essential to the court’s decision and is not the reason for the decision of the case). The court ultimately found that Kane owed NO fiduciary duty to the Beneficiaries.
An interesting footnote is that the Beneficiaries did NOT argue in their initial brief that they were intended third party beneficiaries of the legal services contract so that argument could not be considered. What would have happened if they had included that argument in their brief? That is for another case to decide.
ADVICE: Attorneys… make clear in your correspondence that you DO NOT represent the beneficiaries and they have the right to consult their own legal counsel. Beneficiaries… obtain independent legal counsel who can advise you as to your own rights.
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