Litigation is expensive. A common issue that comes up in Trust and Estate Litigation is the issue of who should pay for attorneys’ fees relating to the administration of a Trust or Estate. More importantly, who should pay for attorneys’ fees where litigation is necessary to preserve the assets of the Estate or where it is necessary for a beneficiary to challenge the Trustee or Executor.
In this Country, Courts will typically follow the “American Rule”. Under that rule, a litigant cannot recover counsel fees from an adverse party. The exception to the “American Rule” is where there is express statutory authorization, a clear agreement of the parties, or some other established exception to the “American Rule”.[1]
Many States, such as Pennsylvania, have laws that permit the award of counsel fees to a prevailing party where it is found that the other party acted in an arbitrary, vexatious, or bad faith manner. Stated plainly, a Court may award attorneys’ fees against a party where the Court finds that the party was acting in an unreasonable manner or was litigating a matter purely for the purpose of annoyance.[2]
In Estate and Trust Litigation, the Courts in Pennsylvania will, in many cases, defer to the “American Rule”. However, where a Trust or Estate is at issue, and the Court finds that the party seeking fees was protecting the assets of the Trust or the Estate, the Court may award attorneys’ fees.
For example, in the case of a Guardian or Trustee where there is an incapacitated person, the Courts may permit the Estate to reimburse the Guardian or Trustee where there is a determination that the actions were done for the benefit of the Estate and/or the incapacitated person.[3] Regrettably, Pennsylvania has limited case precedent that addresses this issue directly. Other Courts have ruled that a Trustee or Guardian of an incapacitated person should be reimbursed for legal fees from the Trust where a Guardian took steps to protect the Trust or protect the incapacitated person’s rights.[4]
Robert Burke is a Partner in MacElree Harvey’s Litigation Department. He frequently handles Estate and Trust Litigation matters in Pennsylvania and New Jersey Courts.
If you would like to schedule a consultation with Robert Burke, please call (610) 840-0211 or email [email protected].
[1] Trizechahn Gateway, LLC v. Titus, 996 A.2d 474, 482-83 (Pa. 2009).
[2] Miller v. Nelson, 768 A.2d 858, 862 (Pa. Super. 2011).
[3] In Re: Damario’s Estate, 412 A.2d 842, 845 (Pa. 1990).
[4] In Re: Shirley L., 45 N.Y.S. 3d 541 (N.Y. App. Div. 2d Dept. 2017) and In Re: Conservatorship of J.R., 252 P.3d 163 (Mont. 2011).
