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N Cal Attorney
N Cal Attorney, Attorney
Category: Estate Law
Satisfied Customers: 9085
Experience:  Since 1983
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Successor Trustee is sued by one of the several beneficiaries

Customer Question

Successor Trustee is sued by one of the several beneficiaries in a small estate (about $12,000). Attorney tells Trustee the Trust will pay for the legal defense unless the court finds the Successor in breach and that would be doubtful. Judge gets both sides to settle. All funds are paid out of the Trust. Attorney was paid several thousand dollars for fees from the small Trust. Now, Attorney is charging Success Trustee an additional $7,000 in legal fees. Attorney demands Trustee "re-pay the Trust for his legal fees", which has been closed for several months, and then pay the Attorney. The court case was settled and withdrawn, Trust paid beneficiaries, and Trust closed. Attorney is going back on his original legal advice that Trustee would not need to pay out of pocket. Is this legal?
Submitted: 1 year ago.
Category: Estate Law
Expert:  N Cal Attorney replied 1 year ago.
Thank you for your question.
Did the successor trustee ever hire the same lawyer who represented the prior trustee?
May I assume that the lawyer had no other involvement with this trust?
Customer: replied 1 year ago.
The lawyer advised the SuccessorTrustee the trust starting a few months after the Trustee died because one of the beneficiaries threatened to sue Successor Trustee immediately after the death of the original Trustee. The lawer did not know the original trustee that passed away.
Expert:  N Cal Attorney replied 1 year ago.
Was there a written fee agreement between the attorney and the successor trustee?
Customer: replied 1 year ago.
No written fee agreement. This trust stretched out to 4 years long and the lawyer advised from time to time during that period, but the beneficiary that said they were going to sue actually did sue. She wanted to be Successor Trustee, she wanted the upside down house, she wanted everything.
Customer: replied 1 year ago.
The crux of the matter seems to be "when is a Successor Trustee personally responsible to pay for huge legal fees in a small Trust?" Attorney originally said ONLY IF A COURT FINDS TRUSTEE IN BREACH.
Expert:  N Cal Attorney replied 1 year ago.
My opinion is that the lawyer was correct, the trust itself was liable for the fees and not the trustee.
Probate Code § 15685: The trustee has an equitable lien on the trust property as against the beneficiary in the amount of advances, with any interest, made for the protection of the trust, and for expenses, losses, and liabilities sustained in the administration of the trust or because of ownership or control of any trust property.
It sounds like the fees were incurred for the protection of the trust, so the trust and not the trustee is liable for the fees.
Also, the fee agreement was required to be in writing, see Business & Professions Code § 6148, posted at
http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&group=06001-07000&file=6146-6149.5
You might want to have a local attorney read the trust document and review the court file and the letters from the attorney, and then advise the successor trustee on how to proceed. You can get a free consultation from some of the trust attorneys listed by location at
http://lawyers.findlaw.com/lawyer/practicestate/trusts/California
I hope this information is helpful.
Customer: replied 1 year ago.
Your statement said "the attorney is correct", but then you said the Trustee is not liable. Which is correct? The attorney is trying to charge the Trustee with personal legal fees, so either the attorney is wrong and the Trustee should NOT have pay out of his pocket or the attorney is right and the Trustee must pay the Attorney with his own personal money.Is there ever a time when a Trustee is personally liable for legal fees, when the Trustee is not found to be in breach?This is what the attorney originally told the Trustee. That is the basis of why the attorney is personally charging the Trustee.As far as not having a written agreement, the Attorney said none was needed since the Attorney was charging the Trust for work he had done previously for the Trust for the past 4 years.
Expert:  N Cal Attorney replied 1 year ago.
I meant the attorney was correct when
Attorney tells Trustee the Trust will pay for the legal defense unless the court finds the Successor in breach
The lawyer said no fee agreement was needed because the trust was an existing client. That necessarily means that the trustee was not a client, and a written fee agreement was required.
You asked: Is there ever a time when a Trustee is personally liable for legal fees, when the Trustee is not found to be in breach?
In my opinion the answer is No (unless the trustee hired the attorney for legal work unrelated to the trust).

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