Unauthorized Practice of Law: How Trustees Can Accidentally Cross the Line — and the Serious Consequences That Follow

In our previous article we examined a Texas Court of Appeals decision that dismissed a trust’s appeal because its non-lawyer trustee tried to represent the trust pro se. That case is only one illustration of a much broader and often misunderstood legal concept: the unauthorized practice of law (UPL).Trustees, executors, administrators, personal representatives, and family members who step into fiduciary roles frequently stumble into UPL without realizing it. Understanding the boundaries, and the risks, is essential for anyone managing a revocable living trust, especially when the trust owns real estate or other assets that may require court action.

What Is the Unauthorized Practice of Law?

The unauthorized practice of law occurs when a person who is not licensed to practice law in a given jurisdiction performs acts that constitute the practice of law. While the precise definition varies slightly by state, the core idea is consistent: only licensed attorneys may represent the legal rights of another person or entity. An individual may appear pro se (for himself or herself), but may not appear on behalf of anyone else, including a trust, an estate, a limited liability company, or another individual.  Typical acts that courts treat as the practice of law include:

• Preparing and filing pleadings, motions, or notices of appeal
• Appearing in court or at administrative hearings on behalf of another
• Giving legal advice to third parties
• Negotiating settlements or legal rights for another person or entity

When a trustee files documents or appears in court “as Trustee of the XYZ Trust,” the trustee is acting in a representative capacity and is therefore practicing law on behalf of the trust.

Civil and Criminal Consequences of UPL

UPL is taken seriously by courts and bar authorities. Consequences can include:

Civil Consequences Include:

• Dismissal of the lawsuit, appeal, or motion (as seen in the Texas case);
• Striking of pleadings filed by the non-lawyer;
• Court-ordered sanctions, attorney’s fees, or costs assessed against the trustee personally;
• Possible personal liability for any damages caused by the unauthorized representation; and or,
• In some jurisdictions, the court may refer the matter to the state bar’s unauthorized-practice committee for sanction.

Criminal and Quasi-Criminal Consequences Include: 

• In many states, UPL is a criminal offense (often a misdemeanor; in some places a felony for repeat or egregious violations);
• Fines and, in rare cases, possible jail time;
• Injunctions prohibiting the individual from further unauthorized practice; and or,
• Contempt of court findings

Even when criminal prosecution is unlikely, the practical damage, lost cases, wasted time, and personal expense. can be severe.

Common Ways Trustees Blunder into UPLHere are real-world situations in which well-intentioned trustees  cross the line:

• Filing a Pro Se Eviction: 
  The trust owns a rental property. The tenant stops paying rent. The trustee, acting as landlord, prepares and files the eviction complaint in the trustee’s own name “as Trustee.” This is classic UPL.

• Appearing as Defendant in a Collection or Foreclosure Case: A creditor sues the trust. The trustee files an answer or appears at the hearing without a lawyer, believing “I’m just defending the trust.” Courts routinely reject this.

• Filing a small-claims action:  
  Someone owes the trust money, or the trustee seeks to recover property belonging to the deceased grantor. Filing the claim “as Trustee” in small-claims court is still UPL in most jurisdictions.

• Responding to a probate or trust contest:  
  A beneficiary challenges the trust. The trustee files pleadings or appears at hearings without counsel.

• Handling code-enforcement or zoning matters:  
  Local government issues notices against trust-owned property. The trustee responds in writing or appears at the hearing on behalf of the trust.

Special Warning for Rental Property Owners

One of the most frequent (and costly) mistakes involves rental real estate that has been conveyed into a revocable living trust.  Once title is held by the trust, the individual owner can no longer conduct evictions pro se. The landlord is now the trust, and only a licensed attorney may represent the trust in court. This is a genuine disadvantage for some property owners who previously handled their own simple evictions. Yet in today’s increasingly complex legal climate, with heightened tenant protections, procedural traps, and potential counterclaims for wrongful eviction, professional representation is generally advisable even when it is not strictly required. A lawyer is far better equipped to navigate the process correctly and protect the trust (and the trustee) from liability.

Practical Recommendations

• Assume that any court filing or appearance on behalf of the trust requires a licensed attorney.
• Budget for legal fees when the trust owns assets that may generate disputes (rental property, closely held businesses, etc.).
• Include clear language in the trust authorizing the trustee to hire counsel and pay reasonable attorney’s fees from trust assets.
• When in doubt, consult a lawyer before filing anything. A short consultation is far cheaper than a dismissed case or a UPL complaint.

Serving as a trustee is a serious fiduciary responsibility. Part of that responsibility is recognizing the limits of what a non-lawyer can do. Protecting the trust, and protecting yourself, means staying on the right side of the UPL rules.

Texas Court of Appeals: A Trustee Cannot Appear Pro Se — The Unauthorized Practice of Law Sinks an Appeal

A recent Texas Court of Appeals decision delivers a clear and important reminder for trustees, settlors, and families who rely on trusts: a non-lawyer trustee cannot represent the trust in court. Doing so constitutes the unauthorized practice of law (UPL) and can result in the dismissal of the entire case.

The Case

In Almericas Veterans Mortgage Trust v. Brock & Scott, the Third Court of Appeals dismissed an appeal filed by the trust’s pro se trustee.  The trustee, Ronnie Dansby, filed a notice of appeal on behalf of Almericas Veterans Mortgage Trust after receiving an adverse trial-court order. The Court of Appeals promptly notified him that, under Rule 7 of the Texas Rules of Civil Procedure, a trustee may not appear pro se in a representative capacity. Rule 7 permits individuals to represent only themselves,  not other persons or entities. Only a licensed attorney may represent a trust.

Because no attorney filed an amended notice of appeal on the trust’s behalf, the court dismissed the appeal. The court relied on established Texas authority which holds that a non-attorney trustee who files pleadings or appears for the trust engages in the unauthorized practice of law.

Why This Matters for Aging-in-Place and Elder Law Planning

Many clients name a trusted family member as successor trustee of their revocable living trust, believing the trustee can handle “everything” without hiring a lawyer. This case shows the limits of that assumption.

• A trust is a separate legal arrangement. When a trustee acts on behalf of the trust in litigation, the trustee is representing another’s interests, not merely his or her own.
• Filing a notice of appeal, a motion, or any pleading for the trust is considered the practice of law under Texas law.
• Courts will dismiss cases, sometimes after significant time and expense have already been invested, if the trust is not properly represented by counsel.

This rule applies not only in Texas but in most states. The principle is the same: non-lawyers may represent themselves, but they may not represent others (including a trust or an estate).

Practical Takeaways for Trustees and Families

• Do Not File Pleadings Pro Se on Behalf of a Trust: Do not file pleadings pro se on behalf of a trust. Even a simple notice of appeal can trigger dismissal.

• Budget for Legal Representation:  When a trust becomes involved in litigation (foreclosure defense, creditor claims, beneficiary disputes, etc.), the trustee must retain licensed counsel.

• Choose Successor Trustees Carefully: Name individuals who understand that professional legal help will be required for court matters, and consider naming a corporate or professional trustee when complex assets or potential disputes exist.

• Review Your Trust Language: Confirm that the trust authorizes the trustee to hire attorneys and pay legal fees from trust assets.

• Act Quickly If a Pro Se Filing Has Already Occurred: Many courts will allow a short window for a licensed attorney to appear and cure the defect.

Bottom Line

A well-drafted revocable living trust can avoid probate and provide excellent management during incapacity or after death. But the trust itself is not a “self-help” vehicle in the courtroom. Trustees who attempt to represent the trust without a license risk having their case dismissed, and may themselves face accusations of unauthorized practice of law.

If you serve as a trustee (or expect to), treat litigation as a professional matter that requires licensed counsel. Protecting the trust’s assets and the beneficiaries’ interests is far more important than trying to save a legal fee.

Retain an Attorney or Accountant to Seek and Obtain a Taxpayer Identification Number for a Trust

Seemingly simple decisions can cause unexpected difficulty administering an estate. Among these is the decision whether to utilize an attorney or accountant to  file for and obtain a taxpayer identification number (TIN) for a trust.  

Most revocable trusts change their tax and legal status upon the death of the last surviving grantor. Sometimes called a settlor, the grantor is the person that generally creates and contributes property to a trust that benefits the grantor during his or her life.  During the life of the grantor, particularly if the trust is revocable, the trust is considered a “grantor” trust under the Internal Revenue Code.  The significance of being classified as a grantor trust is that the trust does not have a separate tax existence; the grantor is not required to obtain a separate Taxpayer or Employer Identification Number (TIN or EIN), and the trust is not required to file a separate tax return.  The grantor affixes his or her social security number to assets requiring a TIN for the trust, and files only a personal income tax return.

Upon the death of the grantor, however, the IRS requires that the trust, which is now irrevocable, utilize a different TIN.  Simply, a trust cannot use the social security of a dead person.  If the trust has taxable income, the trust may also be required file a separate income tax return.  Thus, a successor trustee will typically file for and obtain a new TIN for the trust shortly after the death of the grantor. This application process is relatively simple, and common for attorneys and accountants familiar with trusts, the grantor trust rules in the Internal Revenue Code, and the distinctions between the the original revocable trust and the resulting irrevocable trust.  

Because the proper name and characterization of the trust on titles and accounts is important, attorneys will usually prepare for the successor trustee a Certificate or Memorandum of Trust, which permits financial institutions to properly title assets, and follow the instructions of the successor trustee.  These documents often identify the correct TIN. Filing for and obtaining the TIN, and preparing the Certificate or Memorandum of Trust is usually completed the same day, or within a few days of completion of the necessary forms, for a nominal fee: easy breezy nice and easy.

Increasingly, however, successor trustees are either filing for the TIN themselves, or relying upon professionals with neither accounting nor legal expertise to request and obtain the TIN.  The results can range from frustrating to devastating to the estate plan.

Consider the following examples of mistakes attorneys increasingly observe:

• The successor trustee goes to the bank in order to access the bank account.  The helpful teller advises the trustee of the need to obtain the TIN, and “assists” the successor trustee in applying online for the TIN.  The account is closed, and a new account is opened with the new TIN, and the trustee is given a piece of paper showing the TIN, and sent on his or her way.  The successor trustee goes to the next bank, broker, or financial advisor holding or managing trust accounts.  Confident that everything will go smoothly, the trustee presents the death certificate and the TIN to the institution with a polite request to liquidate the account.  The institution refuses, advising that they do not have everything needed.   The institution is unclear what the title of the trust is or should be, and what authority the successor trustee has regarding the account.  After several attempts the successor trustee is forced to contract an attorney to prepare documents that could have been prepared initially, which would have prevented the delay and frustration.

• The attorney in the foregoing example reviews the paperwork provided by the teller and realizes that the application is completed incorrectly, and that as a result the IRS will likely request the filing of Form 1041 trust income tax returns from the date of the creation of the trust through the present tax year.  In a “pay me now or pay me later,” series of alternatives, the attorney offers to correct the improperly completed application.

• The attorney in the foregoing example reviews the paperwork, but cannot determine whether the application for the TIN was properly prepared.  The teller prepared the application online, but did not print out a hard copy of the application. Concerned that improper preparation of the application will result in expense or loss to the trust, for which the trustee or heirs may seek to hold the attorney responsible, the attorney either (1) refuses to utilize the TIN and recommends abandonment of the TIN, charging the client for preparation of a new application, and paperwork abandoning the prior TIN, or (2) the attorney requires the trustee to sign an acknowledgment that use of the TIN may cause loss or expense, which releases and indemnifies  the attorney from loss resulting from continued use of of the TIN.

• The teller in the previous example identifies the grantor of the trust, now deceased, as the responsible party, since the grantor created the trust.  IRS correspondence is directed to the deceased grantor at the grantor’s last residence.  Because the property is promptly sold, the successor trustee is not advised that a Form 1041 income tax return must be filed. When the successor trustee learns that a return should have been filed, the trustee is forced to pay the tax liability, and resulting penalty and interest, from his personal assets since the trust assets were distributed. 

• An agent assisting a successor trustee in filling out a beneficiary claim form, assists the trustee in obtaining online a TIN, and opening a a money market account to hold the funds.  The successor trustee is the only beneficiary of the trust, and the recipient of various means-tested government benefits.  Although the trust was drafted to protect the assets for the benefit of the beneficiary, under state law, the protection is only effective if the beneficiary is not also the trustee.  Absent the important legal advice and direction to resign as trustee prior to filing the claim form he negotiates the account.  The trustee later learns that the claim of funds constituted income in the month that the claim was paid, thereby disqualifying the beneficiary from a host of government benefits, including free health care.  

• A successor trustee completes the application to obtain a TIN for the trust online, and proceeds to administer the trust estate.  The IRS sends letters demanding Form 1041 income tax returns for fourteen tax years.  The letters, unfortunately, are sent to the deceased grantor’s home, pursuant to the application, which home was promptly sold by the successor trustee.  The successor trustee is later contacted by a revenue agent.  With the assets of the trust long distributed, the trustee pays from her own funds an attorney and accountant to resolve the matter. 

• A family friend helps the successor trustee obtain a TIN, but writes down the TIN incorrectly.  Neither the friend nor the trustee realize the error.  The IRS contacts the taxpayer when a return is filed using the incorrect TIN.  An accountant is retained to investigate and resolve the problem.

Each of the foregoing represent actual cases. The application for a TIN may seem simple, but the terms used in the application, and the precise information requested can be confusing.  The fact that the application can be  prepared online may cause some to believe that the application is either very easy to complete, or that proper completion is unimportant.  Neither assumption is correct. 

Well-meaning professionals, such as tellers, bankers, insurance agents, brokers, and financial planners, and helpful friends may assume that they are are in safe waters completing the form for a customer or friend.  IRS rules require that third parties that complete the application identify themselves, and abide by record-keeping requirements, which rules the well-intentioned often fail to observe.  Failure to observe these rules may make impossible immediate solutions to online technical glitches or typograghical errors, thereby delaying adminstration of the estate.  Perhaps the ultimate tragic irony to the immediacy offered by the online application process is that failure to follow the third party disclosure, record preparation and record keeping rules may mean that a good TIN takes longer to obtain online than if it had been applied for by traditional mail.

Professionals should also be aware that there may be liability for applications prepared improperly, and that the professional insurance may or may not cover any loss.  Non-lawyers and non-accountants are properly cautioned that the completion of the forms, and the accompanying advice, may constitute the unauthorized practice of law, or exceed the scope of the professional's licensing.

Simply, retain an attorney or accountant to seek and obtain the TIN.