AN ATTORNEY HIRED TO REPRESENT THE TRUSTEE DOES NOT OWE A FIDUCIARY DUTY TO THE BENEFICIARIES OF THE TRUST

Posted on May 2, 2015

In Bain v. McIntosh, 2015 U.S. App. LEXIS 3116 (11th Cir. 2015), Howard Walther and Dorothy B. Walther (The “Walthers”) were the beneficiaries of the James Walther Revocable Life Insurance Trust (the “Trust”) and appealed the District Court’s order granting summary judgment in favor of Steven Kane, Esq. and Kane and Koltun, Attorneys at Law (collectively, “Kane”). Kane served as the attorney for the trustee, Patrick Walther (“Trustee”). The District Court held an attorney, in the subject case Kane, retained to represent the Trustee has no duty to the beneficiaries of a trust. The Walthers appealed the District Court’s decision to the U.S. Eleventh Circuit which affirmed the decision of the District Court.

The Eleventh Circuit noted that the Florida Legislature has indicated a reluctance to extend a lawyer’s fiduciary duties to a person other than the trustee.  Section 90.5021(2), Florida Statutes states, “only the person or entity acting as a [trustee] is considered a client of the lawyer.” In addition, the Rules Regulating the Florida Bar narrowly limit a lawyer’s duties to third parties when serving as the personal representative of an estate. R. Regulating Fla. Bar 4-1.7 cmt. (2014) (“In Florida, the personal representative is the client rather than the estate or the beneficiaries.”); see also ABA Comm. on Ethics & Professional Responsibility, Formal Op. 94-380 (1994) (noting that the majority of jurisdictions consider that a lawyer who represents a fiduciary does not also represent the beneficiaries and their belief that the Model Rules reflect this majority view).

The Eleventh Circuit observed that the Walthers did not identify any legal precedent in Florida which establishes a fiduciary relationship between a lawyer representing a trustee and the beneficiaries of a trust. The Walters cited to McCormick v. Cox, 118 So. 3d 980 (Fla. 3d DCA 2013), which the Eleventh Circuit distinguished because in McCormick the Third District Court of Florida held the trustee, who also happened to be a lawyer, breached his fiduciary duty to the beneficiaries of the trust. Id. at 982, 986–87. The court in McCormick did not decide whether an attorney representing a trustee owes a fiduciary duty to the beneficiaries because the trustee and the lawyer in McCormick were the same person.

The Walthers’ citation to In re Estate of Gory, 570 So. 2d 1381 (Fla. 4th DCA 1990), was also found to be unconvincing. The court in Gory 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.” Id. at 1383. The Eleventh Circuit noted that this statement was in dicta, as the question before the court was whether the law firm representing the personal representative of an estate should have been disqualified from representation due to an alleged conflict of interest with the beneficiaries of the estate. Id. at 1382–83. The court there held that, even if the law firm owed a fiduciary duty to the personal representative and the beneficiaries, Florida law did not mandate disqualification because no attorney-client relationship existed between the law firm and the beneficiaries. Gory did not extend an attorney’s fiduciary duty to the beneficiaries of a trust whenever an attorney agrees to represent a trustee. Thus, the Eleventh Circuit concluded Kane, as attoney for the Trustee, did not owe a fiduciary duty to Walther as beneficiaries.

If you or anyone you know is in need of representation in actions involving Guardianship, Probate and/or Trust Disputes, or questions pertaining to such proceedings, please contact The Law Offices of Glenn M. Mednick, P.L., at (954) 315-1154 or gmednick@mednicklawgroup.com.

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