FIVE MISTAKES THAT FIDUCIARIES MAKE
July 18, 2012 § 7 Comments
- Failure to file an inventory. In every type of probate matter, it is required that an inventory be filed, usually within 90 days of appointment of the fiduciary. Often the will waives inventory, but the better attorneys I know always file an inventory, whether waived or not. Why? Because the inventory (a) sets a base line for later accountings, and (b) covers the lawyer’s rear from later claims by other heirs or beneficiaries that items are missing. Better to get those matters out up front where they can be dealt with than to let it hold up closing the estate. MCA 93-13-33 provides that an inventory must be filed within three months of appointment in a guardianship or conservatorship, and even requires an annual inventory. A guardian who fails to do so may be removed and be liable on his or her bond.
- Failure to publish notice to creditors. This requirement is mostly overlooked in guardianships and conservatorships. MCA 93-13-38(1) expressly states that “All the provisions of the law on the subject of executors and administrators, relating to settlement or disposition of property limitations, notice to creditors, probate and registration of claims, proceedings to insolvency and distribution of assets of insolvent estates, shall, insofar as applicable and not otherwise provided, be observed and enforced in all guardianships.” And remember that the statutory affidavit of creditors must be filed before publication of the notice to creditors. MCA 91-7-145(2) says that “Upon filing such affidavit …” it shall be the duty of the fiduciary to publish. An affidavit filed after the publication is a nullity.
- Failure to get authority of the court for expenditures. Perhaps the most pervasive error of fiduciaries. MCA 93-13-38 requires the conservator to improve the estate of the ward, and to “apply so much of the income, profit or body thereof as may be necessary for the comfortable maintenance and support of the ward and his family, if he have any, after obtaining an order of the court fixing the amount” [emphasis added]. Every expenditure must be approved in advance. Emergency expenditures may be ratified, but only if properly proven to be for the ward’s benefit, and properly supported by vouchers. Caution: as set out below, self-dealing expenses may be neither approved or ratified.
- Failure to keep the ward’s estate separate and to avoid self-dealing. It often happens that a son or daughter is appointed to serve as conservator of momma’s or daddy’s estate. The child simply adds his or her name to the parent’s account and proceeds from there. This complicates matters because that joint account belongs 100% to each person whose name is on the account, and becomes the property of the survivor on death. That is certainly not an appropriate or even legal arrangement for a guardian or conservator. The fiduciary in every kind of probate matter needs to open a separate estate, guardiandhip or conservatorship bank account, and make all financial transactions through it and through it alone. MCA 91-7-253 prohibits the fiduciary from paying herself any money from the ward’s estate without prior court approval, and loans to the fiduciary and family members are prohibited also. The statute says that the court can not ratify or approve such payments. If the fiduciary has some expense that needs to be reimbursed, make sure the fiduciary has proper documentation and petition the court for authority. Don’t expect a cash payment or check made out to cash to be approved without abundant supporting documentation.
- Failure to get court permission to move the ward to another county. It’s prohibited to relocate the ward to a county other than the one in which the fiduciary was appointed, unless approved in advance by the court. MCA 93-13-61.
The Better Chancery Practice Blog 
I’m interested in your opinion regarding # 4…where a Ward has jointly titled assets with another, what steps should a Conservator take to separate these assets? Open a new account and transfer half the assets from the jointly titled account into the new account? What if the account comprises funds primarily contributed by either the Ward or the other joint owner? In that case should the Conservator seek to determine what amount was contributed by the Ward and then transfer such amount to the new Conservatorship account? I know some states have statutes that specifically address this issue but I have yet to run across one in Mississippi.
Thanks!
Josiah
You can’t go wrong filing a motion for authority and direction. Notice the other joint owner to be there. If there’s a conflict, the chancellor will have to sort it out based on evidence in the record. I’m not aware of any statute that directly addresses this.
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Thanks for the information. I am still reeling over #2. Does this mean that in cases of guardianships or conservatorships that you can cut-off the obligations of creditors after the 90-day period (just like the ward had died?). Frankly, I did not realize the statute set up this procedure for wards. So, a creditor who may have a long term (unsecured) loan would have to “probate” a claim in the ward’s estate file? I have never seen anyone probate such a claim (but I don’t do a lot of estate work).
I believe the effect of publication in a guardianship or conservatoship is the same as in estate, since the requirement is the same.
You are not alone in being surprised by the publication requirement. There are many lawyers in the same boat.