Choosing a Fiduciary
| Publication year | 1986 |
| Pages | 203 |
| Citation | Vol. 15 No. 2 Pg. 203 |
1986, February, Pg. 203. Choosing a Fiduciary
Of comfort no man speak: Let's talk of graves, of worms, and epitaphs; Make dust our paper, and with rainy eyes Write sorrow on the bosom of the earth; Let's choose executors and talk of wills.
Shakespeare, Richard II, III, ii, 144
Clients have every right to expect that their reasonable choice of an executor will be honored by the court which makes the appointment, an expectation not enjoyed by Shakespeare's soon to be deposed Richard II. Given that expectation and the importance of proper execution of the estate plan, it is incumbent upon attorneys advising their clients to see to it that careful thought is given to choosing an executor. Inadequate attention to the selection of fiduciaries can cause a well thought out dispositive scheme to become a rudderless hulk drifting through the lives of those who are dependent upon it for their well being.
This article discusses the criteria involved in the selection of fiduciaries who will act in a testamentary situation; that is, the selection of personal representatives and trustees who begin to act as such at the death of the settlor.
As in other situations, it is usually helpful to refer to first principles when discussing the choice of fiduciaries with clients. Clients should be advised that a personal representative must perform his duties with impartiality, loyalty and the avoidance of self-dealing, and with care and prudence.(fn1) In addition, attorneys should describe the specific duties required of a personal representative and should not minimize the extent of the responsibilities a personal representative undertakes.
Because of counsels' familiarity with the process, it is tempting to downplay the legal requirements imposed on an estate representative. Although the statutory duties enumerated in the Colorado Probate Code(fn2) are a reasonable exposition of the basic duties, the meaning of the first principles and other legal requirements as applied to a client's particular situation must be explained. Estates vary considerably in the degree to which the qualities of a reasonably able fiduciary appear to be required. However, even the "simple" estate can be an unmitigated disaster in the hands of an unqualified or uncaring fiduciary.
After discussing the choice of fiduciaries and after the client has come up with a name, the first and most elementary factor to consider is whether the proposed nominee is trustworthy. Neither the statutes nor the court rules require surety bonds,(fn3) so a surety company will not be available to assure payment to creditors and beneficiaries. The next factor to consider is whether the person has the ability to handle a checkbook, to maintain simple records, to call when in doubt and to know when doubt exists.(fn4)
If the nominee has met these minimal qualifications, a range of other qualities should be inquired into. The extent of the inquiry depends upon the needs of the particular situation, but certainly more than a cursory evaluation is necessary. If the estate involves extensive property interests, then the personal representative should be able to manage property in a reasonably prudent manner. This can involve dealing with tenants or landlords, stockbrokers or company officers and borrowers or lenders. If the estate is illiquid or insolvent, the personal representative will need to be creative and persistent in...
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