Adeste Fidelis

7 Oct, 2019//Posted by : admin//Category : Uncategorized

The law requires that trustees and executors are faithful to their duties. From the Latin Fidelis comes the word fiduciary. Will executors and intestate administrators, together with other personal representatives, such as guardians for minors and conservators for incapacitated adults, are normally appointed and supervised by a probate court.This court supervision ensures that persons under the financial and/or physical care of such a fiduciary are protected from harm by the fiduciary. Even more protection is commonly provided by a court imposed bond. Rightfully so, since the fiduciary duty owed by the steward of assets held for the benefit of others is the highest duty known to law.

This court supervision and bonding protection does not normally exist in the administration of a living trust that becomes irrevocable upon death of the Trustor. Assuming the normal case, where a successor trustee/executor is a relative, and not a professional fiduciary, they are best advised to seek legal counsel to keep them in line with their responsibilities. This, of course, assumes that their counsel knows and understands the concept of fiduciary duties, and embraces them in their own role. Unfortunately, some attorneys see fit to ignore those duties in an overzealous attempt to either advocate for their trustee client against (other) beneficiaries, or actually throw gas on a blazing conflict between same for their own gain. This strategy places counsel in conflict with their own fiduciary duties. Counsel for trustees thereby walk a thin line, of which they must be ever-conscious.

In the event that a trustee and/or his counsel are not aware of exactly what duties they have in regard to beneficiaries, the California legislature has taken the trouble to spell them out in the Probate Code in ss. 16000 et.seq. Briefly, The duties of trustees, executors and estate administrators are: of loyalty; impartiality; prudent investment; accounting; enforcing or defending claims; and the duty to avoid self-dealing.

The quickest way for a trust administrator to find his or herself in probate court, which, after all, is what the Trustor hoped to avoid with a living trust, is to breach the aforementioned duties. They can do so by acting in conflict with the best interests of the beneficiaries; demanding unreasonable compensation or attempting to profit from the fiduciary position’ failing to distribute in a timely manner; failing to properly invest or account for assets; ignoring or refusing to provide information to beneficiaries or their counsel; negligent management; hiding or removing property from the estate; or “commingling” such assets with their own.

What should be obvious is that the fiduciary has a duty to follow the provisions of the Trust or Will that is the operating instrument. The provisions or distributions provided in a testamentary document can be altered, but only by the consent or agreement of the beneficiaries. What should also be obvious also is that such a consent or agreement should be in writing.

Many nominated trustees are clueless about their duties. Some even look at their “superior” position as such fiduciaries as an opportunity to exact revenge for previous slights or conflicts with their beneficiaries. I actually had one such successor trustee gleefully tell me how he was going to put it to his brother-in-law now that he had the chance. I was able to rehabilitate this client into some resemblance of a caring trustee, but it was not an easy task. Sometimes, the Trustor(s) choices for the position are so bad and ill-conceived, that I just tell them they should decline the position. I can usually accomplish that by telling them what a demanding and thankless job being in charge of other people’s money really is. That is not an exaggeration. Being nominated is not a prize or some type of distinction bestowed on them by parents or others. It is, as they say, a duty, and rather unrewarding one at that, at least in the financial sense, if you are doing it righteously.