Executors and trustees have a difficult task. The assets entrusted to these fiduciaries must be administered solely for the benefit and in the best interest of the estate and the beneficiaries, without any personal advantage or self-interest and subject to the highest standards of loyalty, honesty and integrity. Routinely they are called upon to make difficult decisions concerning investments, tax consequences and distributions and, unsurprisingly, those decisions may be challenged by the beneficiaries. Such challenges often surface as objections to accountings, but may also arise, for example, in removal proceedings or in other actions alleging breach of fiduciary duty. In virtually all instances, the fiduciary will employ counsel, sometimes at substantial cost, to defend him and, provided there has been no fiduciary misconduct and the representation is strictly in connection with his role as a fiduciary (as opposed to representation of him in his personal capacity), the assets of the estate or trust may be charged.
In many cases, then, the question is not whether the expenses of litigation may be charged, but rather how these are to be charged. Not all controversies implicate the interests of all beneficiaries, and at times fewer than all beneficiaries will raise objections to the fiduciary’s actions or inactions. The thorny question is how to equitably reconcile the interests of those who object with those who do not. The Pro Tanto Rule1 generally prevents those who do not object from sharing in the benefits of a successful challenge; the logical corollary is that where the challenge is unsuccessful, those with no stake in the outcome or who could have but did not participate in the controversy should not unfairly bear the expense of that challenge.
