When Hostilities Break Out Between Co-trustees, Where Does That Leave Trust Counsel?

When hostilities break out between individual co-trustees, incumbent trust counsel faces a representation conundrum. In §8.8 of Loring and Rounds: A Trustee’s Handbook (2025), see appendix below, we grapple with the complexities and ambiguities of trust counsel’s relationship with the trust’s beneficiaries. It is a given that trust counsel is an agent of the trustee and as such owes the trustee myriad fiduciary duties. But are fiduciary duties of some sort simultaneously owed by trust counsel to the beneficiaries as well? For purposes of this posting, assume trust counsel owes no fiduciary duties to the beneficiaries, unless trust counsel is knowingly participating in a breach of trust. Assume also that the feuding co-trustees are individuals; neither is a corporation. It is black-letter law that co-trustees take the legal title jointly. Accordingly, prior to the outbreak of hostilities trust counsel represents, as the English would say, the “collective trustee.” Once hostilities break out, where does that leave trust counsel?

If one co-trustee has self-evidently become mentally incapacitated yet refuses to step aside voluntarily such that the other co-trustee is duty-bound to institute removal proceedings, trust counsel needs only see to it that the incapacitated co-trustee is duly represented by independent counsel. Trust counsel is then free to represent the capacitated co-trustee in the matter.

But things get more complicated if “hostilities” are unrelated to self-evident incompetency. Each co-trustee, for example, owes the beneficiaries a duty to reasonably cooperate with the other co-trustee. See generally § 6.2.14 of the Handbook. Assume that each is in breach of that duty, though in this case the reasons for the failure to cooperate predate the trust’s administration. Here, the law of agency will generally govern whether incumbent trust counsel needs to step aside. Just as it is unlikely that the family lawyer of longstanding may represent either the husband or the wife, or both, in a hotly contested divorce, so also it is unlikely that trust counsel may remain in office. His agency-based fiduciary duty to keep the confidences of each co-trustee/co-principal and his co-existing agency-based fiduciary duty to fully disclose to each all relevant and material information pertaining to the other become irreconcilable when each co-trustee/co-principal ceases to cooperate with the other. Of course, the co-trustees are free to give their joint informed consent to having incumbent trust counsel continue to represent the collective going forward.

It gets more problematic for incumbent trust counsel, however, when the co-trustees are accusing each other of being in breach of trust. Each self-evidently needs to be represented by independent counsel in the matter. Resignation is probably the only option for incumbent trust counsel, absent the co-trustees giving their informed consent to having incumbent trust counsel neutrally represent the collective going forward in matters pertaining to the trust’s administration. Collective informed consent, however, is probably not in the cards absent special facts as no one can be certain that incumbent trust counsel will not be drawn into the litigation, perhaps by being called as a witness, or even worse, by being accused of knowingly participating with one of the co-trustees in some breach of trust. See generally §7.2.9 of the Handbook.

In the real world, facts and circumstances tend to be more nuanced. Incapacitation is not always self-evident. Or take the issue of confidentiality. If prior to the outbreak of hostilities incumbent trust counsel had not been made privy to any relevant and material confidential information, all he would need from the feuding co-trustees to stay on the job is their informed consent. So also if his professional involvement with the collective had been merely intermittent and ministerial. If one of the co-trustees had been an institution, the outbreak of hostilities per se should not warrant the re-assignment, or whatever, of its in-house trust counsel. This is because in-house trust counsel ab initio would have been acting as agent for the institutional co-trustee and only the institutional co-trustee.