If a trust is not subject to judicial oversight, such as the administration of a living trust following the incapacity or death of the trustee(s), the trustee should determine whether the escrow document itself refers to the trustee`s payment of attorneys` fees. Otherwise, under California law, the trustee`s attorney is entitled to equitable compensation for services rendered; what trusts typically offer. 24 Goughnour, 2019 WL 1031575, p. *15 (noting that even if a trustee engaged in self-negotiation ultimately won, “a victory in affirmative defenses is not equal to a victory in the cause”; Section 114.064 of the Texas Trust Code is not a dominant party law; Therefore, the award of attorneys` fees under this Act is not contingent on a finding that a party has been substantially successful). Any California trustee bringing litigation should refer to Donahue v. Donahue (2010) 182 Cal.App.4th 259, a prominent California case involving trustee spending of assets in litigation. If the dispute is due to the fault of the syndic, the trustee is not entitled to charge the costs of the dispute against the trustee. Thus, if it is determined that a trustee has committed a breach of trust, the trustee is not entitled to attorneys` fees for the defense of the claim. or if the trustee uses obstructionist tactics to prolong the litigation, his attorney`s fees must be borne by him. Finally, if the trustee engages in conduct that requires his or her removal, he or she is not entitled to reimbursement of the Trust`s legal fees in connection with his objection to such an act.11 The issue on appeal was not whether Patrick was entitled to a refund from the Trust for his successful defence of Michelle`s claim.
but if the $5 million in legal fees awarded by the trial court were excessive. The court noted that eight lawyers from three major law firms formed the former trustee`s legal team, with four to five of those lawyers appearing at the 14-day hearing at the same time. Traditionally, each party to a dispute must pay its own fees and expenses, including attorneys` fees. Courts generally award litigation costs and expenses to another party only in cases where the other party has engaged in egregious conduct such as bad faith or fraud. This is not the case in fiduciary disputes. Section 1004 of the Uniform Code of Trusts provides for a fee transfer mechanism under which litigation costs and expenses may be charged to another party, even in the absence of egregious conduct. Otherwise, if the trustee pays a lawyer with the assets of the trust and the trustee loses the case, the trustee must both reimburse the trust for the amounts spent on lawyers` fees, and the successor trustee is entitled to any lawyer`s trust between the previous trustee and his attorney; Solicitor-client privilege would then remain in the hands of the syndic`s office and would not follow the person who formerly held the position. Article 16247 of the Succession Code authorizes trustees, lawyers, accountants and other agents to advise and assist the trustee in the exercise of his administrative functions.
Section 16243 authorizes trustees to pay “reasonable compensation” to these agents. Most fiduciary instruments contain a specific authority to engage legal counsel from among the listed powers of the trustee. Trustee Fees – Trustees have the authority to employ lawyers, accountants and other professionals for a variety of reasons related to the trustee`s duties in administering the trust. Let us look at the issue of paying legal fees in different contexts. This can be very difficult for a beneficiary who has to pay their own fees while the trustee has the confidence to pay the bill. Given that the case can take years and cost hundreds of thousands of dollars, the burden on a potential beneficiary can be insurmountable. In most cases, the petition will not succeed. The court`s reasoning is that the trustee is entitled to payment of defence costs until it is proven that he has failed in his duty. The trustee is presumed innocent until the breach of his obligations is proved by a preponderance of evidence. In any fiduciary dispute, the award of attorneys` fees — or the court`s decision as to who ultimately pays — is governed by Section 114.064 of the Texas Trust Code.
This section provides that a court may award reasonable and necessary costs and attorneys` fees that may appear to be “just and just.” 15 In applying Texas Trust Section 114.064, the trial court concluded that the award of attorneys` fees was equitable and simply did not depend on the finding that one party “substantially prevailed.” 16 This is the seemingly strange situation where the trust continues to pay fees to a trustee who is currently accused of misconduct and the trustee must continue to make trust payments to the beneficiary under the terms of the trust. As one trustee complained to the writer: “I make payments to her with which she pays her lawyer to sue me!” Redress is possible for an aggrieved beneficiary, but the burden of proof and costs are imposed on the beneficiary until the unlawful behaviour is proven. Since most cases are settled before trial, the possibility of obtaining not only damages, but also fees paid to the opposing counsel`s lawyer is another bargaining chip for the beneficiary. Parties to fiduciary litigation should pay particular attention to the Costs Transfer Act. If this is not the case, they may have to pay not only the lawyer`s fees, but also the other party`s lawyer`s fees. The trial court`s brief judgment was flawed because it did not explain how the trustee`s fee claim met the applicable standards. The brevity of the judgment thwarted meaningful appellate review and also raised concerns that the trial court had used an overly respectful approach, the proverbial stamp, for the fee claim. However, a California trustee does not have a blank check to pay lawyers. Article 16202 of the Estate Code provides that the exercise of power by a trustee is subject to the fiduciary duties of that trustee, including the duty of loyalty to the beneficiaries. Therefore, Section 114.064 of the Texas Trust Code is not a dominant parts law.17 The use of the word “may” in an attorneys` fee statute gives the trial court some discretion in deciding whether or not to award attorneys` fees.18 In other words, just because a party succeeds in a fiduciary dispute does not automatically entitle them to: recover their attorneys` fees in accordance with Section 114.064 of the Texas Trust Code. Alternatively, the opposite is true.19 In a recently updated Trust and Estates Ethics Guide published by the Executive Committee of the California Lawyers Association`s Trust and Estates Section, the authors write that the lawyer “should inform a fiduciary client that the lien belongs to the escrow office rather than the individual, and that confidential solicitor-client fiduciary communications of estate trustees may be discovered.” Disputes often arise between the trustee and the beneficiaries of the trust about the management of the trust.