Grossman Law Firm Blog

Probate lawyers don't get to invest probate funds

This article from Wisconsin caught my eye.  It looks like this probate lawyer misinvested and/or took $1.6 million in funds from his clients.  Incredible.

I've seen more than few California probates in which a substantial amount of the probate estate's money is put in the probate attorney's client trust account.  This never made any sense to me and is, I believe, contrary to the probate code.  Assume an estate is all cash.  Even in today's very low interest rate environment if the entire estate is put in an interest bearing account then the estate will get some interest.  Put the same money in the attorney's client trust account and the estate won't get any interest.  There's just no benefit to the estate to do this.

The probate code requires all the liquid assets of the estate be put in an interest bearing account except for the amount reasonably necessary for the administration of the estate.  There can be times, like when litigation is settled, that some of the estate's cash may be in the probate attorney's client trust account.  But this doesn't happen often.  There is just no good reason to put large amounts of money into the attorney's client trust account.

Similarly, the attorney should never invest the probate estate's assets.  To the extent the funds are invested (and your options are very limited under the probate code) the investment decisions must be made by the executor or administrator.  Never, never allow your probate lawyer to invest estate assets.

The Grossman Law Firm, A.P.C. are San Diego, California probate lawyers.  We help probate estates in San Diego County, California.  We appear in the San Diego probate court for probate cases that come San Diego County south of Escondido.  We appear in the North County San Diego/Vista probate court for probate cases that come from Escondido all the way north to Fallbrook, California.  If you  would like more information on probate and trust administration then order our free book The Insider's Guide to California Probate and Trust Administration as well as our free DVD Probate a Will or Administer a Trust After the Death of a Loved One.