THE SYMPTOMS OF PROBLEM ESTATES

August 30, 2012 § 2 Comments

Arizona courts pioneer in a lot of ways. The latest accomplishment involves monitoring of probate matters.

That state requires that probate cases be classed as minimum risk, moderate risk, or maximum risk. Each file is evaluated to classify it based on certain factors or indicators. Insted of our one-size-fits-all system, the level of reporting and monitoring in Arizona is tailored to meet the needs of the particular case. Each category requires court personnel to meet periodically with the ward or beneficiaries. Minimum risk cases involve a telephone interview every other year, moderate risk require an annual visit, and maximum risk call for a variety of measures including case compliance audit or even forensic investigation. Each level is prescribed meaures of accounting appropriate to the risks inovlved.

I found the risk indicators used by the court to be quite interesting. In fact, I have seen cases where multiple risk indicators were present in cases before our courts. There are 39 used in Arizona. Here are some of them:

  • No family members.
  • Large estate.
  • Dispute among the parties.
  • Late or no inventory or accountings.
  • Inaccurate or no record keeping.
  • Unacceptable accounting practices.
  • Disproportionate or unusually large transactions.
  • NSF checks and bank charges, late payment charges, payment of interest or penalties.
  • Use of ATM’s or gift cards.
  • Health, business or personal problems of the fiduciary.
  • Financial problems of the fiduciary, such as tax liens, judgments or bankruptcy.
  • Difficulty in obtaining a bond or failure to renew it.
  • Attorney with a history of neglecting or mishandling probate matters.
  • Fiduciary with limited experience (especially where the estate is large or complex).
  • Poor or no supervision of fiduciary by the attorney.
  • Ignoring requests of court and show cause court orders.
  • Pattern of rebuffing reqquests for information by attorneys and court.
  • Unauthorized gifts or loans.
  • Pattern of complaints against the fiduciary.
  • Transfers between bank accounts, particularly when close in time to inventory or accounting dates.
  • Lack of contact between guardian of the estate or conservator and the ward.

These are what the courts look at to decide whether a fiduciary should be removed, or whether some other action should be taken to protect the interest of the ward or beneficiaries, but many of these you should monitor yourself in carrying out your role as attorney for the fiduciary. These are the symptoms of an ailing probate matter that require your immediate therapeutic attention. Some of them can be fatal. And if you fail to act promptly, some of them can cost you money. 

[The information here comes from Future Trends in State Courts, 2012, published by the National Center for State Courts]

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§ 2 Responses to THE SYMPTOMS OF PROBLEM ESTATES

  • This is an interesting approach. My initial reaction is that it was too paternalistic. There is such a thing as fiduciary responsibility, and this type of micromanagement would be uncalled-for in most of the probate matters that I have handled. But when I looked at the NCSC report, this type of oversight seems to apply only in the guardianship/conservatorship context, not for decedent’s estates (which makes more sense). Was that your impression as well? Or does the same risk evaluation apply to decedent’s estate?

    • Larry says:

      In my experience, 99% of the problems are in conservatorships and guardianships. Estates, not so much. BUT … to me the common denominator between problem guardianships/conservatorships and problem estates is length of time open. In other words, the longer an estate lingers, the more the odds increase that there will be mismanagement or other fiduciary problems.

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