Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Tuesday, April 13, 2021

Pennsylvania Supreme Court: Trust Beneficiaries Can Examine Trustee’s Attorney’s Billing Records If Trust Is Paying Fees

Estate planningIn In Re Estate of McAleer, the Pennsylvania Supreme Court granted review to determine "whether the attorney–client privilege and the work product doctrine may be invoked by a trustee to prevent disclosure to a beneficiary of communications between the trustee and counsel pertaining to attorney fees expended from the trust corpus." 

The Court says no, if the trust is paying for the trustee's attorney's fees. 

William McAleer ("Trustee") is the sole trustee of a revocable trust that was created by his father, who is now deceased. The Trust was created for the benefit of the Trustee and his two stepbrothers. 

In 2014, the Trustee filed a first and partial accounting of the Trust. The Trustee retained two separate law firms to respond to his stepbrother's objections to the accounting. The probate court dismissed the objections following an evidentiary hearing. 

The Trustee's filings in Pennsylvania court indicated that about $124,000 had been expended from the trust for attorney's fees and costs through December 2015. Trustee's stepbrothers filed a petition for special relief to "determine the reasonableness of those expenses." 

In April 2016, Trustee filed a second and final accounting, which were also objected to by his stepbrothers. Trustee argued that he was never under any obligation to provide his stepbrothers with copies of legal invoices because they were protected by attorney–client privilege. 

The Pennsylvania court ordered the Trustee to forward unreacted attorney's fee billing invoices to his stepbrothers within 30 days. Trustee disclosed the trustee invoices but filed an interlocutory appeal in regard to the attorney invoices. 

The court explained that a party seeking to assert privilege must first set forth facts to establish that the privilege has been properly invoked.

The court concluded that the Trustee failed to present facts establishing the privilege. 

The Pennsylvania Supreme Court stated in its decision that the attorney–client privilege is not absolute. Further, when the interests protected by the privilege "conflict with weightier obligations, the former must yield to the latter." The Court asserted that this case was one in which this conflicting duty was present. 

Ultimately, the Court held that the fiduciary duty to furnish trust-related information to beneficiaries outweighed the asserted attorney–client privilege. 

See Pennsylvania Supreme Court: Trust Beneficiaries Can Examine Trustee’s Attorney’s Billing Records If Trust Is Paying Fees, Probate Stars, April 13, 2021. 

https://lawprofessors.typepad.com/trusts_estates_prof/2021/04/pennsylvania-supreme-court-trust-beneficiaries-can-examine-trustees-attorneys-billing-records-if-tru.html

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Comments

On whether Pennsylvania’s law of evidence recognizes the fiduciary exception to the privilege for lawyer-client communications, the Supreme Court was equally divided [3-3]. Estate of McAleer sets no precedent.

Posted by: Peter Gulia | Apr 19, 2021 7:18:11 AM

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