Payments for trust litigation can come from trusts themselves

Trust litigation can be a complicated area of law, and Florida maintains a variety of codes that regulate how trusts are formed and modified in a court of law. Much of this aspect of law deals with who is entitled to a trust in total or assets and value contained in one.

Legal code in the Sunshine State previously held that legal fees in a case of trust litigation could not be paid out of the trust without court approval because this arrangement would constitute a conflict of interest for a trustee. This put many trustees in a difficult financial position, often while defending their rights to assets.

Amendments to the Florida Trust Code in 2008 included permission for trustees to use trust funds for legal fees once they had notified the court of that intention. This still allows a beneficiary to apply for a court order preventing this, but the benefit of the doubt now rests with the trustee.

There is some confusion as to who is liable for these amounts if a trustee has committed to paying a lawyer out of trust funds that are later enjoined by a court order. The court may address this issue on a case-by-case basis, which may be supplemented by an agreement between the trustee and his or her attorney before the case is heard.

Legal representation may be essential in a case of trust litigation, and it makes the most sense to arrange attorneys’ fees as early in the process as possible. A lawyer may even help with his or her own payment arrangements to avoid confusion or conflict later in the case.

Source: Florida Bar Journal, “Hidden in Plain Sight: Avoiding Conflicts of Interest in Trust Litigation,” Matthew Triggs and Jessica Zietz, accessed March 14, 2018

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