Losing a loved one is traumatic and painful in and of itself, and feelings of grief are only amplified when the person entrusted with your loved one’s estate acts in a way that is unethical or, in some cases, downright illegal. It’s important, therefore, to understand first the duties and responsibilities of an estate’s fiduciary and second, the warning signs that a fiduciary may have breached his/her duties.
Under Colorado Revised Statute § 15-1-103, a fiduciary is defined as:
- a trustee under any trust, expressed, implied, resulting or constructive;
- an executor, administrator, personal representative, guardian, conservator, curator or receiver or bankruptcy trustee;
- a partner, agent, officer of a corporation, public or private, public officer; or
- any other person acting in a fiduciary capacity for any person, trust or estate.
When it comes to a Colorado estate plan, a fiduciary has duties to the estate, devisees, heirs and other interested parties, including creditors. A fiduciary is held to a specific set of duties according to Colorado Law, including:
- The duty of loyalty: A fiduciary must put his/her own self-interests aside and act in the best interest of the parties listed above.
- The duty of impartiality: A fiduciary must treat all parties the same, distributing assets fairly and equally to both beneficiaries and creditors in accordance with the intent of the testator (the person who created the will).
- The Colorado Uniform Prudent Investor Act: A fiduciary must act in accordance with the terms outlined in this Act, which requires a fiduciary to exercise reasonable care, skill and caution in making investment decisions.
An estate’s personal representative (or executor) is also responsible for settling the affairs of an estate. This includes creating an inventory of all the decedent’s assets, keeping accurate records of the estate’s transactions, making distributions to creditors and heirs and generally protecting and conserving the estate’s assets.
Spotting a breach of duty
Now that you understand the basics of the role and responsibilities of a fiduciary, here’s a list of red flags that should raise concerns if breach of duty is suspected.
- Poor record keeping. A fiduciary is required to keep detailed, accurate and up-to-date records of an estate’s assets and transactions. If a fiduciary can’t supply these records and/or if you suspect assets have gone missing but can’t find a record of where they went, then there may be a breach of duty. Similarly, if the fiduciary can’t supply invoices, receipts or other documentation of estate-related transactions that should be a warning sign that something isn’t right.
- Comingling of assets. A fiduciary must keep his/her own assets separate from those of the estate, if he/she has done otherwise, and/or if he/she seems to be using the fiduciary role to advance personal interests, then that should be a sign that he/she is acting improperly.
- Showing favoritism. Remember, a fiduciary must act impartially, so if it seems he/she is favoring the interests of one creditor or beneficiary over another, then that’s a sign of breach of duty.
Ultimately, if you suspect a fiduciary is making poor decisions, making unsound investments or in any way acting unethically, then it’s best to investigate the situation.
If you’re a beneficiary who suspects a fiduciary has breached his/her duty, then Robinson & Henry, P.C.’s probate litigation attorneys can help. We have Colorado estate planning and probate lawyers in Denver, Castle Rock and Colorado Springs who will help you determine if breach of duty is present and fight on your behalf to ensure your inheritance is protected. Contact us to schedule a free consultation.