0:02 Who are you? And where are you going? What do you want? [Music] Hello and welcome to Trust and Estates Weekly. I'm your host, Kevin Bemmel, and I'm here every Monday at 10:00 a.m. Pacific time to talk about estate planning and trust and estate administration uh for um um to help professionals like myself better serve their clients, but
0:37 also for for you if if you have trust and estate issues uh that you're working on, you can speak more intelligently to your adviserss and and to your family members, etc. So, uh, unfortunately my guest for today couldn't make it and so I'm going to be doing a a change up here. Um, and that and I'm going to be talking about uh the liability that an executive or a professional fiduciary uh like myself uh has uh when he uh
1:12 administrates a probate or really for that matter a a a trust. uh trusts the the trustee under a trust uh has typically much broader authority and it's much harder for the beneficiaries to challenge the trustes actions. Um but but in any event uh when someone is administrating a probate or a trust uh that person sits in a fiduciary capacity and and so what does it mean to exercise that authority? What is what
1:49 are the duties and what what are some of the problems that arise and how can they be dealt with and and preferably avoided. So, first of all, I'm going to talk about the fiduciary duties that an executive or an administrator or a personal representative, all of those names apply. You may have heard the term executrics. That's a a a woman who handles the duties of an executive. Uh you you don't hear that too often now. I think I'm one of the few people who use that term anymore.
2:24 And the the duties really come down to four and and and and these all fall within the categories of of com of of performing one's fiduciary duties. So first of all there's the duty of loyalty and this is really at the heart of uh one's fiduciary duties and that is as I'm I'm going to use the term personal representative because that is all-encompassing of whether it's an executive execut etc. So as the personal representative or the PR
3:00 they must act solely in the best interest of the estate and the beneficiaries. That is their job. Okay. And so every decision made needs to be processed through that filter. Okay. So what that means is there can't be any selfdealing. There can't be any special uh um special treatment offered to for
3:35 example uh someone who's the partner of a property with you know with the estate that un unless unless something the personal representative does is in the best interest of the estate that is most likely a breach of fiduciary duty. Okay. So, the main the sort of the the the the main issue is the the PR cannot use estate assets for personal gain. Okay. And and we'll we'll talk about kind of
4:11 how that could happen, what those breaches are in in a few minutes. So, that's that's number one. Number two, the personal representative has a duty of care. So he must manage the estate prudently i.e. he has to timely collect assets whether it's monies whether it's gathering in the actual assets real estate uh personal property all of that needs to be done in a timely way. Now it's it's an interesting uh
4:46 factor in trust admin or in state administration that uh these things tend to take a long long time. Okay. Now in my experience that's usually not because uh the executive or the personal representative isn't trying to move things along. It usually has to do with other factors like how busy the courts are or uncooperative uh heirs and beneficiaries. They slow the process down. Okay. So uh and again when we talk about uh
5:21 preventative practices you'll see some of the ways that a personal representative can deal with that. So he can show that any any delays were not caused by his actions. So the duty of care, timeliness is is among them, making sure bills are paid, um investments are properly managed, um all of the myriad details of duties all have to be done carefully um and prudently would be is is really the best word. Okay. The next is the duty to act impartially.
5:56 So if there are multiple beneficiaries, okay, they need to be treated impartially, fairly regardless of whatever personal relationships may exist between the personal representative and any particular heir. And indeed, one heir may be only getting a small portion of the estate and another heir may be getting a lot more. that is not a basis for uh unequal treatment of the heirs e except in the matter of distributing their respective
6:33 inheritances. Okay. So if if someone is a 10% heir, they have just as much right to communication with the personal representative as as someone who's getting perhaps the other 90%. Okay? So there's a duty to act impartially and it should be scrupulously maintained. And then finally there's a duty to account. So, it's all good and well if the uh personal representative acts with loyalty, care, and impartiality,
7:08 but their word is typically not sufficient to uh to um to rebut uh a a a complaint that they haven't fulfilled those duties. And so, there's a duty to account. There's a duty to keep accurate records especially of all financial activities and decisions and to provide clear reports to the courts and the beneficiaries. Okay. And while the stress is going to be on financial issues, there are many things that a that a a
7:43 personal representative handles that may not be solely financial. And nonetheless, uh there should be careful records kept of of those those matters. All right. So those are the the basic fiduciary duties of a personal representative. So what are some of the common areas then where those duties are breached? Well, one of them is what's called comingling. Comingling happens
8:18 when a fiduciary mixes his personal funds or the funds of his business that they amount to the same thing with for example the funds of the estate. And so anytime a personal representative is acting the there should be a separate account for the estate and that account should carry the estate's federal tax ID number, federal FEIN number, federal employment ID number. Okay. And and it's particularly care the the personal representative should be particularly careful to make
8:54 sure not only is the account separate but it has a separate FIN in order to ensure that no comingling or no appearance of comingling is taking place. Okay. So you you know if you are owed a fee for example. Okay. Let's say the estates account is getting a higher interest rate on its funds than you get on your own. And so, you know, maybe it's a much larger amount of money. And so, if you leave your fee there, okay, you'll be
9:29 getting more more money. Well, you can't do that. Okay. If you were to take the interest that your fee earned while being in the estate's account, that could even be something worse called conversion. it could be considered stealing. Okay? So, make sure going back to the duty of care that you're timely. You're not, you know, leaving your funds sitting in the estate's account once once they're due to you and and and trying to, you know, benefit by that. Okay? So, don't
10:05 coingle. Don't convert funds. Conversion of funds is the actual taking of funds by the personal representative when they do not belong to him. Okay? And conversion is a fancy word for stealing as I alluded to a moment ago. Okay? So be scrupulous in the handling of money. Okay. Um th those th those are sort of the legion breaches um by personal representatives. Okay. delaying distribution of of asset uh assets or liquidation of assets without
10:40 justification. Okay. So if a property needs to be sold uh in order to perhaps pay estate taxes for example or in order to meet other obligations. Okay, let's say there's a creditor to the estate who's entitled to a large sum of money. the unjustified delay of selling an asset maybe in order to earn additional interest for the estate. Um that that could be a a breach of one's
11:15 fiduciary obligation. Now I mentioned a a few minutes ago the estate must act solely in the interest of the estate and the beneficiaries. But remember, a creditor to the estate has a claim on that estate and that claim is superior to the beneficiary's claim. So if that creditor is not paid timely, that creditor could petition the court for interest on its claim uh you know for uh a quicker sale of the asset. Um, and in
11:50 any event, if if a dispute arises um because of of the creditor not being paid, that could mean additional costs to the estate. Okay? All of that is not in the best interest of the estate. Okay? So, delaying distribution or distribution of or liquidation of assets without justification that that's another type of breach. Now, there may be a justification. Okay. Um and uh um and so in that case that justification should be documented. So
12:26 if there were ever a question it can be shown the records can be shown and and uh you know the case made that this was this was justified and here's why. Okay. And then the next one is something I just mentioned pay failing to pay debts or taxes on time. Okay. So, the failure to pay a debt or taxes on time could result in the estate having to pay penalties. And if that's the case, uh that means the the funds left for distribution to the heirs have been reduced and that could be considered a breach of financial uh I
13:03 mean a fiduciary duty. Okay. and then ignoring provisions in the will or ignoring court orders. Again, pretty obvious breach of duty. Now, there could be a court order that as the personal representative you intend to dispute. Okay? So, the court can issue an order. That doesn't mean you have to immediately follow it if if you think the order is not in the best interest of the estate. So then you it may be perfectly justified to take time to
13:39 consult with your lawyer and to to discuss on what basis the order could be challenged or overturned. Okay. So uh when we say ignoring the provision of a will or a court order again that's without you know justification there there may even be justification for ignoring a provision in the will uh and and or ignoring what appears to be a will altogether if there's concern over the validity of the will or over validity of
14:15 the provision. Okay. So, in that case, uh you know, again, you want to consult with your lawyer, but you don't want to unreasonably delay looking into those if you think there are grounds uh for um not complying with a court order, not complying with uh the provision in a will. Okay. So, what could be the consequences then of of a breach of one's fiduciary duty? Okay. So, first of all, there could be um personal
14:50 financial liability for losses or mismanagement. So, uh uh you know, if if the breach is particularly egregious. So, then it's possible uh that the personal representative will be held personally liable. Okay. Now, that may happen through negotiation with the beneficiaries. They may be uh they may be represented by their own legal counsel and that legal counsel may contact the personal representatives lawyer and they may ne negotiate some
15:25 kind of settlement based on some kind of breach of fiduciary duty without the court getting involved. Okay. But the fiduci I mean the beneficiaries also might take legal action against the personal representative and in that case uh you know now the court is going to get involved. By the way creditors as I mentioned they too can take uh legal action against the personal representative if they think that there's been a breach of his duty. And so now the court will get involved. There could be hearings. there may still be a negotiated settlement and then
16:01 perhaps a stipulation to the court uh to settle the matter. Okay? Uh and and and but that's another consequence of a potential breach of fiduciary duty. And finally, the personal representative could be removed um as as the administrator for the estate or the trustee could be removed as the trustee for the trust. Okay, which typically will result in some reputational harm. All right, so the penalties can be uh quite big for breaching fiduc for
16:38 breaching one's fiduciary duty and and having that breach sustained in in a especially in a in a court in a probate court. When life brings unexpected changes, managing inherited property shouldn't add to your stress. Magnum Properties specializes in probate and trust real estate management. We handle the complexities while you focus on what matters most. From property maintenance to tenant relations, from legal compliance to maximizing value, we're
17:13 your trusted partner through every step. Magnum Properties, Inc. turning property challenges into peace of mind. Call us today at 213-264-4396 or visit magnumprops.com. Okay, so this is Trusted Estates Weekly and I'm your host Kevin Bemel. We're talking about uh uh p the duties of a personal representative um and the the types of uh breaches that might occur and and what would happen um as a result
17:50 of those those breaches. So I I've already talked about what is the fiduciary duty, what are some common breaches and their consequences. So what can be done from a preventative standpoint uh to um better ensure that a a breach won't happen or won't be alleged. Okay. And and the first thing is is to maintain open communication with the the parties that that are involved. So I know in my practice I send out a weekly email update about the
18:27 administration of an estate to the interested parties. It could be to the beneficiaries or heirs, could be to creditors. It's typically will go to the lawyers involved. Okay? And that way they know what's going on. So so first of all they cannot sustain the allegation that that they're not being kept informed. they are. Number two, they know the specifics of what I'm doing so that if they don't like something or they they they think something is wrong, they have an opportunity to respond about that in a
19:04 timely fashion. Okay? So let's say that uh I were handling an estate and for some reason I was I appeared to be you know delaying the the the sale of an asset. Okay. So that will be reported along with the justification for it. So that if someone who's who has an interest in seeing that asset sold quickly, if they think I should be proceeding with a sale, they have an opportunity to respond. Now, let's say, you know, two months goes by and and and
19:39 then they say, "Well, you should have been you should have sold it two months ago." Well, so then the response to that is you knew about it two months ago. If you s thought I should have sold it then, you should have said something. You didn't. So, you know, um you can claim that I've breached my fiduciary duty, but but now you're talking about hindsight. And most likely, well, not most likely, but hopefully the court will see that and say this is this is an act in bad faith and you know, Kevin has fulfilled his fiduciary duty. Okay, so keep open lines of communication,
20:14 provide regular updates to the interested parties. Okay, that's number one. Number two, as a personal representative, you should make sure that you have professional assistance. So the typical executive or administrator even the typical profession professional fiduciary is not a lawyer and they are not experts in probate law. They're experts in well if they're a professional fiduciary they're experts in probate administration. An executive or or you know sort of lay administrator they may not even be experts in administration. They may just
20:50 have been the person that the deedent appointed. And so having legal advice on a regular basis is very important. So is having accounting advice. Again, most personal representatives, they're not accountants. And even if they are, they may not have knowledge about the specifics of accounting for probates and for estates and trusts. And so an accountant who has knowledge and experience in that area should be brought in for their assistance. And that would be a valid expense for the
21:26 you know to the estate for the personal representative to get that advice. And then financial advisors may be needed, real estate advisors may be needed, appraisers, um business appraisers, uh business people who specialize in business transition. There could be a whole range of professional assistance that a personal personal representative engages depending on what are the assets in the estate, what are the issues the estate faces etc. Okay. So the main thing is
22:03 don't make decisions by guessing. Okay. Get the proper advice. get get legal, accounting, investment advice, whatever issue it is with which you're dealing. Make sure you get the proper advice. I'll I'll give you a a somewhat ridiculous example. So, here in the city of Los Angeles, when a pro when a uh re well, I don't know if it's just a residential property or any property is sold, there's a form that has to be completed and submitted to the building
22:38 department. And recently that form contained a provision where the seller must certify whe as to whether there are protected trees on the property. Now between you and me, I have no idea what a protected tree is. Okay? And so on one of the estates that I'm handling where a a home is being sold, we're in escrow and up pops this form. And unlike other parts of the form where the buyer can wave uh
23:16 having a disclosure made about certain aspects of the property, the buyer cannot wave having the seller declare or certify, I believe it's under penalty of perjury as to whether there are protected trees on the site. And so the escrow officer sent me this form to sign. And and I I I got back to her. said, "I can't sign this form. I have no idea what a protect whether there are protected trees on the property. I don't even know what one is." And so, we had to spend time. I mean, the escrow
23:51 officer did this. It shows you the quality of this particular escrow officer. Her by the way, her name is Charity Score. I'll give her a, you know, a plug here. Um, and um, gosh, what is the name of her escrow company? I don't remember, but she she's with an escrow company in Beverly Hills. So, she found an arborist who can go on site and survey the trees and give me a report as to whether there are protected trees on site. Very inexpensive, like $99. Okay. So, it would be a breach of my fiduciary
24:27 duty to sign that form certifying either there was or there wasn't without knowing whether there are or are not protected trees on that site. Okay. So the $99 expense of the arborist survey is a justifiable expense in this case to make sure that I'm getting proper advice uh and and not creating a liability to the estate. Okay. So so if you don't know, get professional advice and if you're not sure
25:02 who should be giving you that advice, reach out to your lawyer, your accountant, whomever. reach out to a another fiduciary who's more experienced than you are and and and and they will they will help you. Okay. Uh next, another preventative practice is meticulous documentation. So, keep receipts, records of transactions, statements, even a timeline of decisions can be beneficial if it's something that's going to take a long time and might potentially be controversial. Okay. So, keep good records. If you're
25:39 if you have to account for money, I would recommend using some kind of accounting or bookkeeping software so that you can generate reports um easily andor hire a bookkeeping bookkeeping service. So, my friend uh I'm giving lots of plug free plugs here. So, my friend uh Von Marie in New York, she has a bookkeeping and accounting service and she specializes in trust and estate matters. Okay? So, bring in someone like Von Marie and she will be happy to help
26:15 you. And again, while there's an expense there, if there's a lot of money being handled and and having accurate books of account is is is, you know, going to be potentially difficult to maintain, you want to bring in a professional uh to do that. Okay. And then finally, if you're in doubt about something as as a personal representative, you can apply to the court for guidance. I'll talk about this a little bit more in a few minutes, but just because you're not required
26:50 to submit something to the court for approval, that doesn't mean you're prevented from doing so. If in your opinion or your lawyer's opinion or or your joint opinion, I it makes sense to get the court's approval in order to ensure that you're not breaching your fiduciary duty and creating some kind of liability that you would, you know, want to avoid. Okay? So, um, again, I'll I'll talk more about what that is in a few minutes, but again, just to be clear,
27:26 even though you may not need to get approval by the court, that does not prevent you from seeking it, and it may be prudent to do so in many circumstances. Okay? Again, especially if you're dealing with a contentious administration where the beneficiaries or heirs are are are in dispute and and perhaps one of the or more of the beneficiaries doesn't like that you've been appointed the personal representative. So then the court is there to ensure that whatever steps you're taking in the eyes of the court
28:01 before you take them are a fulfillment of your duty and therefore you're you're protected from some kind of adverse action on the part of the beneficiaries or creditors or whatever. Okay. So what then are the remedies that a beneficiary or really another party could uh could use if they think that the personal representative has breached his fiduciary duty. So, I I mentioned these a little bit um a uh a few minutes
28:37 ago. Uh but but first of all, um if there is an informal dispute, so so the the the beneficiary or if again if they're represented by legal counsel, their lawyer, uh could request uh records or raise concerns directly with the fiduciary. That's always the best way to start. So if you think there's been a problem, that doesn't mean there is one. It's it's prudent to do some kind of investigation. So if you're a beneficiary or you're representing a
29:13 beneficiary or maybe you're representing a creditor, so the prudent thing to do is to check it out first. Now, if the personal representative is being uncooperative, so you may not be able to do a whole lot of investigation. Um, and so you may need to go on to the next step without having done so. Um, and then once the legal process has started, now you will have tools at your disposal in order to compel the release of information. Okay? But always best to start things off uh you know at at
29:49 without you know creating more of a dispute. Okay, more potential bad feelings and and just raise the concerns. Hey, you know this doesn't seem right to me. Um may I get the the records related to this so I can review them and satisfy myself that indeed you know what you did is is proper. Now, if the if the fiduciary is wise and is a good fiduciary, a good personal representative, they won't have a problem with that. Okay? Because if there is some kind of mistake, okay, better to fix it without a huge court
30:24 battle than going through a a lot of court proceedings and still having end end up having to fix it. Okay? And so this is another reason why I do these weekly updates. It's uh because I often talk about contemplative contempl I'm contemplating. Contemplative I guess is the word. I'm actions that I'm contemplating but haven't done yet. So that the people involved if if they're concerned about them, they can voice their concerns upfront before I've taken
31:01 the action. And then if I need to change what I'm doing, I can before I've done it. Right? So I'm I'm you probably heard the the saying it's better to ask for forgiveness than permission. That's typically not the wise way to go in the administration of an estate or trust. Okay? And so oftentimes it's much better to get people's input first uh and then and then you know take whatever action needs to be taken. Again, the larger the more complicated the estate or if the
31:38 estate if there's already bad feeling between say creditors in the estate or among beneficiaries or between beneficiaries uh better off to socialize a potential action first rather than taking the action and then you know people find out about it after the fact and and now a dispute arises. Okay. So, uh, if you're a beneficiary or another party, request records, uh, raise concerns directly. If, if that doesn't settle the matter, then there could be,
32:13 uh, then you might want to file a formal legal remedy. That could be petitioning the court for, you know, release of records. It could be petitioning the court for uh, directions in a certain matter. And it could be uh even petitioning court for removal of the personal representative. Okay. If if it if it appears that the the the problem is particularly egregious. Okay. So, uh once a once the court is going to be petitioned, most likely you're going to want to want you're going to want to have a lawyer involved. Okay. and they
32:49 can um they they can advise you as to what the proper potential and proper legal remedies would be depending on the nature of the concern. Okay. And excuse me once the court is involved. Okay. So now there is there's almost for sure going to be some kind of hearing. Okay. and and the judge will hear the matter. If the judge disagrees and says no, the personal representative has acted properly, that's probably going to
33:24 close the matter, although the matter could be appealed. Uh if the judge finds that there was some kind of breach by the personal representative, so he can impose penalties. He can require um restitution. He can remove the personal representative. he can even um initiate a criminal referral if if he believes that this is a case of fraud. Okay. So, all of those are potential remedies that are available to beneficiaries and and other parties. I know I'm I'm involved in a case where
34:01 the uh original administrator uh was um attempting to defraud a creditor. the creditor ended up having to file file a you know a claim basically in the probate court and eventually the judge removed that that administrator. Okay. And and then that then that's why I was brought in. Okay. So these things do happen. Um they probably happen more often than uh certainly I'd like to see them happening. Uh but but indeed they do happen.
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35:18 searching. And this is uh Trust and Estates Weekly, and I'm your host, Kevin Beml. And we're talking about the duties uh and potential breaches that that a personal representative who's administrating an estate or a trustee who's administrating a trust might uh might become involved. And we've talked about a number of subjects. So now I want to talk about what are some defensive strategies that personal representatives or trustees can use in order to protect themselves. So
35:56 it can it can be a sleeplosing proposition uh to be administrating an estate and and that's not good because sleep deprivation can exacerbate a situation where you end up making a mistake or or worse um breaching some duty. So first of all, anytime you're in anytime you agree to take such a job, whether it's as a professional or as a lay person, um you need to be willing to make good faith efforts to properly administrate
36:31 the the estate or trust. So you have to demonstrate reasonable judgment, honest intent, lack of self-interest and if you think that you will be challenged in doing that. So then don't accept the the appointment. Okay? Or if you think there's and this is this is oftenimes the case if you're if you're representing somebody if you're a lawyer representing somebody, right? and you think that there may be uh a chance of selfdealing by one heir if they're appointed if that heir is appointed uh
37:08 as as the personal representative. So you know make the case to the court that you think that this person won't be able to make a good faith effort to properly administrate the estate. Okay. But for for personal representatives themselves, make sure that you're demonstrating reasonable judgment, honest intent, lack of self-interest. Second, and I talked about this before, make rely on professionals. So do not make decisions when you don't have the
37:44 proper expertise. Okay? So whether it's the example I gave a little bit earlier about hiring an arborist to decide whether there are protected trees on a site, whether it's a lawyer handling a legal matter, an accountant handling a tax and accounting matter, whatever it is, get the proper advice, document that advice. Okay? So it's all well and good to get the advice. Um, but if you don't f document it and follow it, you might as well not have gotten it. And and and because
38:20 indeed if you got the proper advice, didn't follow it, that's going to be used as evidence that in fact you intended to breach your duty and and now you've now it's an even worse situation than it was before. Okay. So what I would say is, you know, when in doubt, reach out to another professional and discuss minimally discuss it with them and see if there's grounds for that professional to get uh uh further involved. I mean, I I've had estates where there are, you know, four or five
38:58 attorneys involved because although my attorney who who would typically specialate specialize in probate administration w will always be there, depending on the assets of the estate, there may be a need for specialized legal knowledge that my attorney doesn't have. So, I handled an estate where there was a need to potentially dis distribute some properties uh from an existing LLC, but there was concern about what are the property tax reassessment ramifications of doing so.
39:33 My attorney could not answer that question. So, I had I brought I didn't ha I didn't have to, I suppose, but I'm not an expert in property tax assessments. So I brought in an attorney who is who could advise on that issue to make sure that whatever was done would not create a liability for the estate. Okay? So it's not a matter necessarily of having one lawyer or one accountant. There may there may need to be more than one in those categories depending on the issues faced by the estate. Okay? And
40:11 again with appraisers, if there is real estate and a business and there's artwork and there's, I don't know, coin collections, whatever, whatever there is, there's horses. I talk about that on this show, those of you who've watched it before, right? It's while the probate referee is going to value all the assets, the reality is probate referees are not revi are not reliable appraisers of assets. Most do not have true expertise to do accurate valuations of all the assets. Okay? They're
40:46 appointed by the court to perform a certain function. But if you're going if if if the the estate is large enough that an estate tax return, a 706 needs to be filed and it's going to be reviewed by the IRS, a probate referee is not going to cut it. Okay? in terms of um providing valuations that will pass IRS scrutiny. And so there may be a need for multiple appraisers uh to make sure that the assets were valued correctly. And so to make sure that you're not accused of some kind of
41:21 breach of duty, you're going to want to engage the the proper appraisers, the properly qualified appraisers I should say, depending on the type of assets held by the estate. Okay? And then excuse me. Okay. And then next you want to make sure you have a paper trail on various decisions, advice received, uh ration for actions taken. I
41:56 mentioned having a timeline on decisions before, but the timeline should be annotated uh with with what was done so that if need be it can be reconstructed and and presented to the court. Okay. So make sure that you have things in writing. Okay. My general rule is I do everything by email. Okay, emails are valid evidence in court. Number one. Number two, when things are in writing, then you know there there you don't get into a he said she said kind of
42:31 situation where I do discuss things uh verbally. I will follow up with an email confirming what was discussed. Pardon me. Got a frog in my throat. Doesn't want to go away. Okay. So, make sure you have a detailed paper trail. And finally, if there is if some kind of dispute does arise, so uh respond in a
43:07 timely fashion. Okay? Don't let it fester. So the longer things go unadressed, the more likely they are to become a problem to kind of explode and and then and now it'll be much more difficult to resolve them than it would have been if they had uh been handled quickly. So if if a dispute arises and you for whatever reason you don't you're not working with an attorney, it's time to bring in an attorney quickly, okay? and get that get that lawyer up to speed as quickly as possible. Okay. Cooperate with court procedures, respond promptly
43:44 to demands for uh information, whether it's production of documents, interrogatories, all these things in the discovery process. You know, comply with them unless your lawyer is advising you not to. And then the your lawyer will need to take steps to either quash the request or to demonstrate to the court why the why the request is unreasonable or or or apply to the court to to justify the delay in response. Okay. So, those are some defensive things that personal
44:20 representatives can uh do in order to avoid being held uh liable for some uh alleged breach of duty. Okay. And then finally, what tools are available in order to mitigate your risk? Okay. So first of all there is executive or personal representative liability insurance available. Okay. And they they
44:55 will cover uh legal fees and judgment judgments that that uh result as a regard as res as a result of mistakes made by fiduciaries. Now if you're a professional fiduciary you can get what amounts to errors and omissions insurance eno coverage that is available. Okay. One of the best ways to get it is as as a perk by joining the ITA, the independent trustee alliance because you can get it, you know, through a what amounts to a business association at a reduced rate. Okay? So,
45:30 you know, if you're concerned about this, and if you're a professional, you should be, then, you know, seriously consider getting some sort of professional liability coverage or if you're a lay a lay personal representative, some kind of executive liability insurance. Number two, in many cases, the court will require that the personal representative be bonded. So that bond re uh essentially ensures the estate against mismanagement or uh what's called what's known as conversion that I you know the stealing that I
46:05 mentioned before. So if a if a personal representative uh were to take money out of the estate that didn't belong to him, the bond would pay off to make up for that theft. and then the bonding the the uh company that issued the bond it'll now be up to them to recover the money from the personal representative. So the estate is protected which is why the bond is required. Okay. And and then like I said the bonding company is left to deal with
46:40 the personal representative in terms of recovering the money paid out. Okay. And then finally, and I mentioned this before, if you're uncertain about whether you should do something or not do something, apply to the court for uh what for instructions basically. And the these go by different names depending on the the jur the particular jurisdiction. But you you you know as as a personal representative, you can file for an instruction from the court. you can file for uh you can file a petition uh to
47:18 with the court. So let's say let's say you have the authority to sell a property uh but as a result of certain issues, you're not certain that you should go through with a sale. So even though you're not required to get court confirmation of that sale, you can still apply for court confirmation. Okay? And in that case, uh, you know, the court will issue a a a decision one way or the other. And once the court has made the decision, the heirs or whoever else might be concerned about the sale of the property can't come back and say, well, you shouldn't have done this. Because
47:54 your response will be, well, the court said I should, so I did, or the court said I shouldn't, and so I didn't. Right? That's the benefit of applying to the court for direction because it's in essence sort of like litigating the issue in advance except that it's it's it's not really uh it it won't turn out to be the a long and and egregious litigation uh in the way that uh litigation after the fact oftent times is. Okay. and and also then the judge
48:29 will recognize look you're as the personal representative you're looking to do the right thing and so the judge will you know if if if allegations are made of breach of duty the judge can will see wait a minute that can't be the case because the personal representative is by by the sub submitting to or requesting instruction or submitting a petition or whatever is looking to make sure that he does the proper takes the proper steps, does the right thing. Okay, so those are the risk mitigation tools. So the bottom line is
49:07 when you're a personal representative, you you have to know and fulfill your fiduciary duty. You have to be careful in doing so. And there are steps that beneficiaries and other interested parties can take if they think you fail to do so. And there are things you can do to protect yourself. Okay? So, take this take this to heart and and you know, prot if you're not clear on some of these things, I'd encourage you to watch this or listen to this show again and and make sure you understand these
49:43 are the fundamental principles. Okay? Obviously, we can we could get into lots and lots of examples um that that you know that are illustrative of the kind of problems that arise. I know I've certainly uh dealt with them in my career. Um hopefully I've I've dealt with them well and and and you know, in the end gotten to a satisfactory result. But but the liabilities that a personal representative assumes are real and and therefore how the personal rep personal representative acts is very very
50:19 important. So so that's that's the the the show for today. Uh tomorrow, Tuesday at 10:00 a.m. is my show, Business Lessons from the Military. My guest is Darren Burrell, a United States Air Force veteran who became a uh venture capitalist, and he's going to talk about that journey and the the lessons he learned from the military that have allowed him to be a successful venture capitalist. On Wednesday at 10:00 a.m. uh Pacific time, my guest is John
50:55 Solleter. And John is uh he's he's a businessman of my vintage, I'll say. has and an an entrepreneur many times over and he's going to talk about how do you be successful I you know in in business. He's going to talk about what he's learned over a lifetime of starting and running and selling businesses. So please join me for my conversation with John and then one week from today the will be the next edition of trust and estates weekly. So,
51:31 I thank you very much for joining me. Wish you a wonderful rest of the day and signing off as I always do. Marie darling, you are my bell.