July 10, 2014 § 1 Comment
SB 2240, which went into effect July 1, 2014, makes significant changes in the way we handle adult guardianships and conservatorships. You can access it at this link.
The purpose of this post is to alert you to it, and to recommend that you read and begin to apply it. In a future post, I’ll break it down further.
For now, here are some highlights from the new law:
- The law clarifies the distinction between a conservator and a guardian. A conservator now is a person appointed by a court to “administer the property of an adult, including a person appointed under Section 93-13-251, et seq.” A guardian under the new law is a person appointed by a court to “make decisions regarding the person of an adult, including a person appointed under Section 93-13-111 and Sections 93-13-121 through 93-13-135.”
- The new statute provides for “protective orders,” which are either emergency or permanent orders for management of a protected person’s property.
- It states that it provides the sole jurisdictional basis for courts of this state to appoint guardians or issue protective orders.
- It details jurisdictional and venue requirements for courts of this state to exercise jurisdiction.
- The new provision sets out elaborate procedures for courts of Mississippi to communicate with courts of foreign states in determining jurisdiction, acquiring testimony and other evidence, and in registration of judgments. It establishes procedures for transfer of guardianships between states.
- It creates a new Title 14, in Chapter 93. The law begins at § 93-14-101.
I can’t tell you categorically that this new law will be an improvement of the cobbled-together mishmash of provisions governing adult guardianships and conservatorships that we have now, because I have not fully digested it. I am willing to bet, however, that it will be a big help.
One improvement that this new law makes is in the area of interstate proceedings. Up to now there has been no way to transfer guardianships and conservatorships between states, and there has been no clarity in cases where elderly relatives are removed from one state and taken to another to set up fiduciary arrangements. This has been a significant problem in an age where it is more common for adult children to live in one state and the parents or elderly relatives live in another state and are in need of management.
Section 93-14-504(a) states that “This act applies to guardianship and protective proceedings begun on or after July 1, 2014.”
June 17, 2014 § 7 Comments
In this district we have had a problem with fiduciaries having been appointed and never qualified by taking the oath and posting any required bond, and consequently not having Letters issued.
A fiduciary has no authority to act unless and until that person has qualified, which requires taking the oath, posting any required bond, and having Letters issued.
In one case in my court the person appointed used the order appointing him, without Letters of Administration ever having been issued, to sell a car, and he closed a couple of bank accounts. He sold the car and pocketed the money; who knows what he did with the funds. The lawyer who opened the estate spent a considerable sum out of his own pocket trying to recover the estate’s money. Not surprisingly, the perpetrator was judgment proof and can no longer be found on this planet.
In another case, a woman (not the mother) testified that she was guardian of the child, but when I ordered the insurance attorney to get the guardianship file, it showed that only an order appointing her had been entered, and she had never taken an oath or posted a required $10,000 bond. Incidentally, she testified that her lawyer had told her that the order was adequate, and she proceeded to use that apparent authority to negotiate a settlement of the child’s claim.
We came up with some language that we now require all attorneys to include in their orders opening estates, guardianships, and conservatorships. You may find this language useful in your own district, and even if you find it superfluous, you just might conclude that there’s no harm in including it.
Here it is:
IT IS FURTHER ORDERED AND ADJUDGED that if the fiduciary has failed to qualify by posting the required bond, if any, taking the oath, and having appropriate Letters issued as required by this order and the laws of the State of Mississippi within thirty (30) days of entry of this order, then the Chancery Clerk is hereby ordered and directed to notify the court immediately of such failure, and the court shall enter an order dismissing this civil action without prejudice and without further notice to the fiduciary, or attorney of record for the fiduciary, or any other parties who have entered an appearance in this civil action.
IT IS FURTHER ORDERED AND ADJUDGED THAT THIS ORDER DOES NOT AUTHORIZE [Name] TO ACT AS THE FIDUCIARY FOR [Name of ward or decedent] UNLESS VALID LETTERS [Testamentary, or of Administration, or of Guardianship, or of Conservatorship] ARE ATTACHED HERETO.
IT IS FURTHER ORDERED AND ADJUDGED that persons who use or accept this order without the attached Letters as court authority to act or conduct the affairs of the [ward or decedent] shall be subject to sanctions by this court.
April 11, 2013 § 2 Comments
It seems to be a more and more frequent problem that when we issue orders in delinquent estates, an attorney pops up and says something like, “Well, judge, the reason we haven’t filed an inventory, or any accountings since 1997 is that I lost contact with the fiduciary.”
Who’s got the problem in that situation?
Well, UCCR 6.02 says this about that:
In guardianships and conservatorships an attorney must be faithful to both fiduciary and the ward and if it appears to the attorney that the fiduciary is not properly performing duties required by the law then he shall promptly notify the Court in which the estate is being administered. Failure to observe this rule without just cause shall constitute contempt for which the Chancellor will impose appropriate penalties.
And what exactly are those “duties required by law?” Here’s what UCCR 6.02 says:
Every fiduciary and his attorney must be diligent in the performance of his duties. They must see to it that publication for creditors is promptly made, that inventories, appraisements, accounts and all other reports and proceedings are made, done, filed and presented within the time required by law, and that the estates of decedents are completed and assets distributed as speedily as may be reasonably possible.
It’s pretty clear from the language of the rule that your neck is in the noose along with your fiduciary. If the requirements are not met, you are as responsible for the lapse as is your fiduciary. Oh, and explaining to the chancellor that you had no idea that the Uniform Chancery Court Rules had this provision will in all likelihood only make things worse.
Here are some helpful posts from the past … Five Mistakes that Fiduciaries Make … Five More Mistakes that Fiduciaries Make … Approaching Zero Tolerance … and … Essential Procedures in Guardianships and Conservatorships.
If the landscape of your probate practice is littered with failures to file accountings, inventories and other reports, and you have estates that due to sheer neglect are languishing unclosed far beyond what is reasonable, look no farther than yourself for a place to lay the blame. That’s where the judge will look.
March 20, 2013 § Leave a comment
Angela and Brian filed a joint complaint for divorce on the sole ground of irreconcilable differences. While the 60-day waiting period was running, Angela was involved in a car wreck, suffering a broken neck and brain damage. Because she was no longer able to handle her business, a conservator was appointed and authorized to proceed with the divorce action.
On January 10, 2000, the trial court entered the final judgment of divorce. It included a provision that Brian reimburse Angela for $5,500 she had paid toward purchase of an automobile. In a subsequent proceeding brought by the conservator for enforcement of the judgment, Brian was ordered to pay the money, and the court awarded a judgment with interest, entered January 9, 2001.
In January, 2011, nearly ten years after the 2001 judgment, Angela’s conservator sought and obtained a writ of garnishment. After back-and-forth series of rulings, the trial court cancelled the writ because the judgment had expired due to the statute of limitations in MCA 15-1-47. The court rejected the conservator’s claim that Angela’s incapacity had tolled the statute of limitations as provided in MCA 15-1-59 because the “conservator is fully authorized to employ attorneys and bring actions on the [ward’s] behalf,” citing USF&G v. Conservatorship of Melson, 809 So.2d 647, 654 (Miss. 2002).
Angela’s conservator appealed.
In the case of Conservatorship of Lewis v. Smith, rendered March 5, 2012, the opinion has some key observations about the duties of a conservator when it comes to enforcing and protecting the rights of the ward:
¶8. Lewis contends that the chancellor erred in finding that section 15-1-59 does not toll the statute of limitations in regard to the judgment’s expiration under section 15-1-47. Under section 15-1-47, a judgment lien expires after seven years from the entry of the judgment.
¶9. In her August 26, 2011 order, the chancellor found that section 15-1-59 was “inapplicable to the present matter as it concerns persons with disabilities and minor children; when a conservator was appointed to protect the legal rights of the mentally incapacitated Angela Ann Lewis, thus invoking the provisions of Miss[issippi] Code Ann[otated] [s]ection 15-1-53.” Mississippi Code Annotated section 15-1-53 (Rev. 2012) states:
When the legal title to property or a right in action is in an executor, administrator, guardian, or other trustee, the time during which any statute of limitations runs against such trustee shall be computed against the person beneficially interested in such property or right in action, although such person may be under disability and within the saving of any statute of limitations; and may be availed of in any suit or actions by such person.
It is important to note that “the duties, responsibilities and powers of a guardian or conservator are the same.” Harvey v. Meador, 459 So. 2d 288, 292 (Miss. 1984). See also Miss. Code Ann. § 93-13-259 (Rev. 2004).
¶10. From the language of the order, the chancellor found that the right vested in the conservator and not in Lewis. Lewis contends that this contention is contrary to Weir v. Monahan, 67 Miss. 434, 7 So. 291 (1890). The Mississippi Supreme Court in Weir found that section 15-1-53 only applies “where the legal title to property or the right of action, at law or in equity[,] is in the guardian, and not the infants.” Weir, 67 Miss. at 455, 7 So. at 296. The court noted that “[w]hen the legal title to the property is vested in a trustee who can sue for it, and fails to do so within the time prescribed by law[,] . . . his right of action is barred . . . .” Id.
¶11. Under Mississippi Code Annotated section 93-13-38(1) (Rev. 2004), “All the provisions of the law on the subject of executors and administrators relating to settlement or disposition of property limitations . . . shall, as far as applicable and not otherwise provided, be observed and enforced in all guardianships.” Also, Mississippi Code Annotated section 93-13-38(2) (Rev. 2004) states: “The guardian is empowered to collect and sue for and recover all debts due his said ward . . . .”
¶12. From the language of section 93-13-38, the conservator had a fiduciary duty to pursue the $5,500 owed to Lewis. Therefore, the right of action was in the conservator and not Lewis. The conservator was appointed prior to the entry of the judgment of the divorce. The conservator brought the motion to hold Smith in contempt for failure to pay. It was the conservator’s fiduciary duty to file a writ of garnishment when Smith failed to pay. Under the plain language of section 15-1-53, if the right is in the guardian, in this case the conservator, the statute of limitations runs against the guardian and not the ward.
¶13. The right in action is in the conservator, therefore making the savings clause of 15-1-59 inapplicable, because “[t]he purpose of the savings statute is to protect the legal rights of those who are unable to assert their own rights due to disability.” Rockwell v. Preferred Risk Mut. Ins. Co., 710 So. 2d 388, 391 (¶11) (Miss. 1998). Lewis has a court-appointed conservator who is able to assert rights on her behalf. Therefore, Lewis does not require, nor is subject to, the protections provided by the saving clause.
If you are representing a conservator — or a guardian, executor or administrator, for that matter — make sure that your client is doing what is necessary to protect the legal interests of the ward or beneficiary, and is not allowing statutes of limitation to run.
the burden of responsibility of a fiduciary is a heavy one, as I have emphasized here before. This case points up yet another way in which your fiduciary may make a “perilous mistake” in handling the ward’s business. It’s your job to steer your client in the right path, and to help avoid the common mistakes that fiduciaries commit.
October 16, 2012 § 2 Comments
Conservatorships are becoming more commonplace as we baby-boomers and those at the end of the previous generation age.
With the increase in numbers of conservatorships we are seeing more disputes over who gets to serve as fiduciary for the ward. Should it be the neighbor who has always been there while the uncaring children were doing their thing in Phoenix and Chicago? Should it be the only living brother who has a questionable past? Should it be the sister who lives on the other side of town and has visited the ward every day, or should it be the sister who lives in the county and sees the ward every day, or both? Or should it be someone named by the ward before she slid off into incapacity?
Family members often have competing interests. There may be an honest difference of opinion as to what is best. Or there may be bad blood. Or there may be ulterior motives. Any combination of these and other undertones can lead to a court confrontation.
The latest case comes out of Madison County.
Caryn Quilter filed a petition to be named conservator for her aunt, Medora Weaver. Caryn had begun visiting Medora at her home in Houston, TX, after Medora’s husband died. Caryn heard from neighbors that aunt Medora wasn’t doing well, so she moved her to an assisted-living home in Riddgeland, MS, near where Caryn lived.
Caryn filed a petition with the chancery court, supported by the proper physicians’ affidavits. But Caryn’s father, John Salter, filed a counterclaim, asking that he be appointed conservator, since he was the older brother of Medora. In his pleading he admitted that a conservatorship was necessary, he just did not agree that Caryn should serve in that capacity. He also said that Medora requested that he, not Caryn, serve as her conservator.
Chancellor Cynthia Brewer heard testimony from the contending petitioner and counterclaimant, as well as from Medora herself, and she considered the physicians’ affidavits. Based on the proof, she ruled that a conservatorship would be in Medora’s best interest, and that the conservator should be “an objective, non-related person,” and she appointed Arthur Johnston, Chancery Clerk of Madison County, to serve.
John appealed, claiming (1) that the chancellor was in error in determining that Medora needed a conservator, (2) that he was more suited to serve since he had experience in a similar role, (3) that Medora had designated him to serve, and (4) that he was more closely related.
In Salter v. Johnston and Quilter, rendered October 9, 2012, the COA affirmed Judge Brewer.
As for Salter’s argument that it was error to find that a conservatorship was in Medora’s best interest, the COA found that substantial evidence supported the chancellor’s decision. And, besides, the court pointed out that Salter had pled himeslf for appointment of a conservator, and Salter’s own attorney at hearing announced that his client did not dispute that a conservatorshipw as necessary in the case. The COA rejected this argument.
The court disposed of the remaining arguments as follows:
¶13. Salter alternatively contends that, if a conservatorship is needed, he is the proper party to act as conservator. He bases this contention on the fact that Weaver has requested that he act as conservator and on the fact that he has previous experience as a conservator. Salter also contends that he should be given preference as conservator because he is Weaver’s brother.
¶14. We note at the outset that our laws concerning conservatorships give no preference to an individual’s next-of-kin to act as conservator. See Miss. Code Ann. §§ 93-13-251 to -267 (Rev. 2004 & Supp. 2011). Furthermore, the chancery court determined that it would be in Weaver’s best interest if a non-relative served as conservator after hearing testimony regarding the contentious relationship between Salter and Quilter. Given these facts, the chancery court did not err in appointing Johnston to serve as conservator. This issue is without merit.
This case highlights that it is well within the chancellor’s discretion to decide whether a conservatorship is necessary, and who should be appointed to serve as fiduciary. Interestingly, the statute also provides that the chancellor shall be the one to determine the number of witnesses and quality of testimony necessary to decide the issues in the case. Here, the chancellor quite prudently allowed a full hearing at which the parties were at liberty to develop the proof that they felt was necessary to support their claims.
July 24, 2012 § 3 Comments
We talked here about some mistakes that fiduciaries make. Continuing the hit parade, here are five more:
- Failure to account timely and properly. All expenses and receipts must be accounted for annualy or more frequently if ordered by the court. UCCR 6.03-6.06 detail the voucher requirement. There’s a right way and a wrong way to file an accounting. There is a checklist for doing an accounting here. You can read more about accounting and vouchers here.
- Failure to seek and heed legal advice.The UCCR impose a heavy duty on attorneys to advise and supervise the client-fiduciary in probate matters. The burden can be so onerous that I call it the “yoke of probate.” You can not blithely turn your fiduciary loose to figure it out for himself or herself. You have a duty to the court and the beneficiaries. A case showing how severely the Supreme Court views the joint duty of the attorney and fiduciary-client, read this post on the case of Matthews v. Williams. And a case showing the disastrous consequences of an attorney’s complicity in the fiduciary’s malfeasance, check out this post on the ongoing Hinds county trainwreck involving (soon-to-be-former) attorney Michael J. Brown. Make sure your fiduciary knows what the do’s and don’ts are. Put together an instruction sheet and have your client sign a copy to keep in your file for your protection. There is a reason that UCCR 6.01 requires every fiduciary to have an attorney. It’s because the attorney is the arm of the court who is responsible to supervise the fiduciary and make sure everything is being done properly. As I have said many times before, if that is an unpalatable concept for you, simply refuse to handle probate matters.
- Failure to get authority for investment of the ward’s estate.Your fiduciary is obligated to increase the ward’s estate, if possible. The courts apply the prudent investor standard, which can be second-guessed. There are a few ultra-safe investments that the fiduciary may make without prior approval, per MCA 91-13-3, including time CD’s, savings accounts, and most FDIC- and FSLIC-insured accounts (Note: to my knowledge, credit union accounts do not qualify). Only problem is that in this era, those accounts produce interest rates closer to zero than anything that would actually increase the ward’s estate. So the prudent investor has to look to more speculative investments, which are allowed under MCA 91-13-3 and -5. You should have your investment plan approved in advance by the court, with adequate supporting documentation so that anyone looking at it later will be able to see that the court had a valid basis for its order. Again, one of the transgressions in Matthews v. Williams was the fiduciary’s helter-skelter, unapproved investment scheme.
- Failure to give proper notice to close.MCA 93-13-77 requires that the final account in a conservatorship or guardianship must be on file for 30 days, and the ward must have have 30-days notice and an opportunity to inspect it and file any objection. A ward who is a competent adult may waive the notice and accounting. A ward under 21, however, must be served with process and may waive nothing. In estates, every beneficiary or heir must either join in the accounting, or waive process, or be served with process and given an opportunity to be heard.
- Failure to keep the attorney and court informed of contact information. Make sure your fiduciary knows and understands that you need to notified immediately of any change of address, telephone number and other contact information. It’s a good idea to get the names and telephone numbers of a couple of local relatives and/or long-standing friends who can help you locate a fiduciary who has wandered off.
There are some simple strategies to avoid these missteps. Here is a link to Five Tips to Improve Your Probate Practice that outlines some things you can do. The primary attribute you need, though, is vigilance. Set up procedures in your office to get the information you need, to instruct and advise your fiduciary, and to keep in touch. It could keep you out of some costly trouble.
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.
July 11, 2011 § 8 Comments
Lawyers in my district are aware that I have begun cracking down on the handling of estates, guardianships and conservatorships. Delinquent and inadequate accountings, lack of inventories, absence of vouchers and other deficiencies are no longer tolerated.
My motivation in part has been the fact that there are lawsuits pending against local lawyers claiming mishandling of fiduciary matters. On the coast only last year, it was discovered that a lawyer serving as county administrator until his death may have misappropriated funds in excess of a million dollars.
If you’re going to handle probate matters, understand that as the lawyer you have a grave responsibility for which you may be held liable by judgment for the proper handling of the estate by the fiduciary. Let me repeat that you may be held liable by judgment.
My responsibility as chancellor is not only to ensure that the assets and rights of the ward or estate are protected, but also to see that the attorney does not err.
To get an idea of the gravity, you need to read and take to heart the Mississippi Supreme Court’s decision in Matthews v. Williams, 633 So.2d 1038 (Miss. 1994). In that case, the conservator failed to file an inventory and, when he finally did, omitted financial assets. He failed to file accountings, and when he finally did reported expenditures made without any prior approval of the court. He made investments without approval of the court, and was unable to account properly for them. The chancellor approved his actions, but when that chancellor left office, the next chancellor granted a petition to remove the conservator. Here are some key excerpts from the court’s opinion (beginning at page 1039):
Every guardian shall, within three months after his appointment, return to the court, under oath, a true and perfect inventory of the estate, real and personal, and of all money or other things which he may have received as the property of his ward; and he shall return additional inventories of whatever he may subsequently receive. And he shall annually return an inventory, under oath, of the increase of the estate, if there be any. A guardian who shall fail to return inventories may be removed and his bond put in suit, unless he can show cause for the default. (Emphasis added)
The first inventory was not filed until February 23, 1988, a year and two months following Dan’s appointment. It did not mention bonds owned by the estate. The third inventory filed May 13, 1990, purporting to show the inventory of the estate as of December 31, 1989, lists “Series E. Bonds $2,063.22.”
The bonds were first identified by serial number and date of purchase in the fourth inventory showing assets as of December 18, 1990, and filed January 7, 1991, which states: “Series E Bonds (all $25.00/7 year Bonds),” and then lists twenty-seven bonds by serial number and showing dates of purchase from July 1966 through July 1969. Subsequent inventories were not timely filed, and no reason was given therefor. There is no explanation for failure to include the bonds.
II. ANNUAL ACCOUNTS
It shall be the duty of the guardian … to improve the estate committed to his charge, 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 of his family, if he have any, after obtaining an order of the court fixing the amount…. The guardian is empowered to collect and sue for and recover all debts due his said ward … (Emphasis added)
This statute requires that a court order fixing the amount to be spent for the care and maintenance of the ward be obtained prior to making such expenditures. Dan simply made the expenditures as he saw fit. When this Court addressed such action in Welch v. Childers, 195 Miss. 415, 420, 15 So.2d 690, 691 (1943), we held:
A minor under guardianship is a ward of the Chancery Court. All receipts and disbursements of his estate are required to be under the authority and direction of the Chancery Court or the Chancellor in vacation. The expenses for the maintenance and support of the ward cannot be proved in any other way. The object of the law is to guard against dishonesty and mismanagement of the estate by the guardian…. The law does not leave the amount of the expenditures by the guardian for the maintenance, support and education to (the guardian’s) discretion. The sum must be fixed by the court. If the guardian contracts therefor without the sanction of the Chancery Court or Chancellor, the liability therefor is personal to him, and he cannot be allowed for it in his accounts for the ward. The guardian has no power to bind the estate of his ward without the sanction of the Chancery Court or the Chancellor.
That prior court approval is absolutely required by statute before a conservator makes expenditures seems never to have occurred to counsel representing Dan or the chancellor who then examined and approved them. Expenditures for the care and maintenance of Mrs. Mathews and her property were made by Dan as though he had some blanket power of attorney to spend as he thought best, and only then report it to a chancellor. No explanation was offered to the chancellor for all these expenditures having been made without court approval, nor did the chancellor require one. This is of profound concern to this Court. We again remind attorneys for estates of wards and decedents and the chancellors who examine accounts and inventories that they, too, have special and far-reaching fiduciary duties. It was the obligation of the attorney to advise the conservator as to his statutory duties, responsibilities, and limitations on expenditures. As for chancellors, a chancellor who must approve accounts and inventories has a duty beyond deciding lawsuits. He is under an obligation first to see that accounts and inventories filed comply with the statutes before he approves them. He is also the “superior guardian” of the ward. This Court long ago in Union Chevrolet Co. v. Arrington, 162 Miss. 816, 826, 827, 138 So. 593, 595 (1932), held:
Infants and persons of unsound mind are disabled under the law to act for themselves. Long ago it became the established rule for the court of chancery to act as the superior guardian for all persons under such disability. This inherent and traditional power and protective duty is made complete and irrefragable by the provisions of our present state constitution. It is not competent for the Legislature to abate the said powers and duties or for the said court to omit or neglect them. It is the inescapable duty of the said court and or the chancellor to act with constant care and solicitude towards the preservation and protection of the rights of infants and persons non compos mentis. The court will take nothing as confessed against them; will make for them every valuable election; will rescue them from faithless guardians, designing strangers, and even from unnatural parents, and in general will and must take all necessary steps to conserve and protect the best interest of these wards of the court. The court will not and cannot permit the rights of an infant to be prejudiced by an waiver, or omission or neglect or design of a guardian, or of any other person, so far as within the power of the court to prevent or correct. Grif.Chan.Prac. §§ 45, 360, 530, 533. All persons who deal with guardians or with courts in respect to the rights of infants are charged with the knowledge of the above principles, and act to the contrary thereof at their peril. (Emphasis added) Also, Mississippi State Bar Association v. Moyo, 525 So.2d 1289, 1293 (Miss.1988).
Solicitors for guardians and conservators and chancellors who must approve their accounts and inventories who ignore these fiduciary responsibilities make a perilous mistake. [Note from the opinion: We are not comforted by the May 18, 1990, decree approving the third annual account in which the chancellor first authorized the conservator to “pay all future medical, personal, and other expenses for the creature comforts of Frances Mathews.” With no representation from Dan as to why any of these expenses might be, the chancellor gave him blanket authorization to expend his estate’s funds.
IV. INVESTMENTS WITHOUT COURT APPROVAL
Whenever the guardian shall have money of his ward not needed for current expenditures, or directed to be invested for the ward, he shall apply to the court, or chancellor in vacation, for direction as to the disposition he shall make of it. The court or chancellor shall determine whether he shall lend it at interest, and upon what security, or how he shall dispose of it. If the court or chancellor designate the person to whom the loan shall be made, or the security on which it shall be made, and the loan to be so made, responsibility shall not attach thereafter to the guardian; but if the court or chancellor shall entrust him with discretion in the matter, he shall be bound for the exercise of sound judgment…. Any guardian who fails to report to the court the fact that he has money of his ward not needed or allowed to be used for current expenditures, and to ask the order of the court as to the disposition of such money, may be chargeable with interest on the same at the rate of eight per centum (8%) per annum during the time of failure. (Emphasis added)
Moreover, we have been unable to trace the certificates of deposit from one accounting period to the next because the numbers identifying them differed. Interest proceeds appear to have been treated inconsistently, some deposited in the ward’s checking account, other reinvested. Interest deposited in the checking account identified by certificate of deposit numbers differed from the numbers identifying the certificates in the inventory for that period.
On January 23, 1987, Dan petitioned and on January 26, 1987, received court approval to commence legal action to recover money fraudulently obtained from her. No report was ever made to the court of the outcome of this action.
V. QUESTIONABLE EXPENDITURES
We do not have before us and do not address the justification for any expenditures made by Dan as conservator, or their reasonableness or necessity. These may be proper inquiries upon remand. Neville v. Kelso, 247 So.2d 828, 834-835 (Miss.1971).
The chancellor should also upon remand see that inventories reflect and accurately trace the investment of all funds.
Our sole inquiry on this appeal is whether the chancellor abused his discretion in removing Dan as conservator, and for the reasons set forth she clearly did not. Harris v. King, 480 So.2d 1131, 1132 (Miss.1985); Conner v. Polk, 161 Miss. 24, 29, 133 So. 604, 605 (1931).
I don’t know how it could be any clearer. You deal lackadaisically with probate matters at your peril. Your law license, your reputation as an attorney, your malpractice coverage, and even your own assets are on the line. I am not being melodramatic when I say this; I am being completely truthful and trying to wave a huge caution flag. Matthews v. Williams makes it abundantly clear that the approval of the chancellor will not shield you or your fiduciary.
April 19, 2011 § 7 Comments
- Always accompany the executor, administrator, guardian or conservator to the bank or other financial institution to open the estate account. That way you can make sure that the funds are properly deposited into a restricted account, and that the fiduciary does what she is supposed to do.
- Always ask that a duplicate bank statement be sent to you for the estate account. If the bank balks, direct that the bank statement be sent to you and not the fiduciary. Review each bank statement promptly when you receive it to make sure that no unauthorized disbursements are being made. Also, when the next accounting comes due — Voila! — you have a complete set of bank statements.
- Have your secretary or paralegal call the fiduciary every couple of months to inquire how things are going, to remind of upcoming deadlines, and to ensure that the address and telephone info in your file is accurate. This is not only great client relations, it’s one of the best means possible to discover and address problems in their early stages.
- Accompany your fiduciary to inventory that safe deposit box, and, if possible, bring a witness. It seems that there is often someone lurking in the wings ready to allege that there were all sorts of valuable items in there that the fiduciary is not accounting for.
- Do an inventory even when one is not required. Inventory establishes the baseline for accounting. It also can help neutralize the claims of many disgruntled heirs and sideline-sitters.
April 11, 2011 § 16 Comments
_____ State the time period covered by the accounting, starting with the date of the last accounting, or if a first account with the date the estate, guardianship or conservatorsip was opened.
_____ List all assets of the estate as of the ending date of the last accounting. (MCA §91-7-277, §91-7-93, §93-1333, §93-13-67, and §93-113-259 and UCCR 6.03).
______ List the date, source, and amount of each item of income since the last accounting. (MCA §91-7-277, and §93-13-67).
______ Total the income and state a total.
______ List the date, payee, explanation or description, amount, and authority (the date of each authorizing court order) for each disbursement since the ending date of the last accounting. (MCA §91-7-277, 91-7-279, §93-13-67p, and §93-13-71 and UCCR 6.04 and 6.05).
______ Attach all documents supporting all income and disbursements. This is the “voucher” requirement that was previously posted about here. The required documentation includes ALL statements of any accounts or investments showing income or disbursements. This may also include canceled checks and receipts. (See statutes and rules cited above).
______ Total the disbursements and state the totals.
______ List and explain for all non-financial assets that appeared on the previous accounts, but are no longer in the control of the fiduciary.
______ A request for payment for the fiduciary including a bill or itemization to support request. (MCA §91-7-299 and §93-13-67 and UCCR 6.11).
______ A request for attorney fees, including a bill or itemization to support said request. (MCA §91-7-281 and §93-13-79 and UCCR 6.12).
______ Close with a summary calculation of the value of the estate coming into the hands of the fiduciary at the opening of the accounting period, a total of the income, a total of the disbursements, and a total balance in the fiduciary’s control that will be the beginning figure for the next account.
______ Have the fiduciary sign and swear to the accounting. (MCA §91-7-277 and §93-13-37 and UCCR 6.02).
Thanks to Jane Miller, Senior Staff Attorney for the 12th District.