Lawyers as Estate Trustees and Legal Advisor to the Estate
An estate trustee is a fiduciary. A trustee owes a duty of loyalty to the beneficiaries to carry out the terms of the Will with honesty, due care and attention. Lawyers may act as an estate trustee and a legal advisor to the estate. The lawyer’s duties as a lawyer and duties as an estate trustee may overlap, which may complicate compensation and challenge ethical obligations.
Duties as Estate Trustee
The obligations owed by an estate trustee to the beneficiaries apply to solicitors acting as estate trustee. The estate trustee has the following obligations:
- To avoid situations in which the estate trustee may be in a conflict;
- Act impartially among the beneficiaries;
- To inform and account (an estate trustee must maintain a complete record of his/her activities and have his/her accounts ready and open for inspection by a beneficiary); and
- To act personally in the performance of the duties imposed (estate trustees are permitted to select agents to perform tasks where it would be regarded as prudent for a person in the ordinary course of business to delegate the performance of these duties).
These duties are in addition to duties imposed by the instrument creating the trust (ie, the Will) and statute. Moreover, a lawyer acting in a dual capacity should also consider professional obligations (eg, the Rules of Professional Conduct).
Compensation as Estate Trustee
An estate trustee has the right to compensation, which is based on the Will, the Trustee Act, and the relevant case law
Unless compensation is fixed by the Will, an estate trustee is entitled to “such fair and reasonable allowance …” There is an unofficial rule of thumb that an estate trustee will generally be paid a total of 5% of the estate value plus a possible care and management fee by the time the administration is complete. That amount is a guideline, which can be increased or reduced at the discretion of the Superior Court.
Lawyers who provide legal services to an estate and who act as estate trustees are permitted to be compensated for both roles. However, lawyers must distinguish between their services as lawyers and their services as estate trustee. The lawyer has the onus to show that he/she is not charging lawyer’s rates for executor work. Lawyers who act as estate trustees ought to keep separate dockets for legal work and for estate trustee’s work and account to their clients separately.
An estate trustee’s conduct may be protected or indemnified in several ways. A lawyer, owes a duty of care to his/her client, the estate trustee. The protections which may be afforded to the estate trustee are likely not afforded to the lawyer.
A lawyer acting as a lawyer and estate trustee appears to be covered by LAWPRO insurance (though additional insurance is probably useful) a lawyer acting solely as an estate trustee (and, therefore, providing no legal services) would not be covered by LAWPRO and would be exposed to legal claims as any other estate trustee.