by Francis Burton Doyle, Esq., WealthPLAN
Attention Attorneys, CPAs, Trust Administrators & Private Fiduciaries:
When an attorney represents a trustee, he or she may have some vicarious liability to the beneficiaries of the trust for his fiduciary client’s breaches of trust. This is a disturbing and recent development because under the prior law an attorney had legal liability only to his client, the trustee. The reasoning behind this rule was that recovery was not possible where there was no privity of contract between a beneficiary and the attorney for the trustee.
Recently, however, courts have held that the lawyer representing a trustee can be held liable directly to the beneficiaries of a trust where the attorney “participated” in a trustee’s breach of trust. What constitutes “participation” remains unclear under these recent court rulings. This lack of specificity creates a treacherous danger zone for attorneys representing trustees.
In any case, the recent trend of courts to hold attorneys responsible directly to beneficiaries for the breaches of their fiduciary clients, mandates that attorneys take measures to more aggressively educate their fiduciary clients as to their duties and responsibilities as trustees. They also need to take other measures too such as requiring their fiduciary clients to produce proper reports and accountings to keep trust beneficiaries reasonably apprised of the financial status of the trust.
Quote to Ponder
“See how the masses of men worry themselves
into nameless graves,
while here and there a great unselfish soul forgets
himself into immortality.”
~ Ralph Waldo Emerson
About the Author:
Francis Burton Doyle, Esq., is the founder of WealthPLAN, with over 35 years of experience in Tax, Estate-Planning Probate, Trust Administration and Litigation. He is Certified Legal Specialist, Taxation Law and Probate, Estate Planning and Trust Law (California State Bar). Frank is the Past President of both the Santa Clara County Estate Planning Council & the Silicon Valley Planned Giving Committee. Frank is also the Past Chair of the Planning Committee, Annual Jerry A. Kasner Symposium, Santa Clara University, School of Law. Mr. Doyle provides all the course development and instruction for the Advanced Legal Training Institute.
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