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Avoiding Fiduciary Conflicts of Interest
/in Administration of Estate, Administration of Trust, Fiduciary Duties, Fiduciary Litigation, Personal Representative, Removal of Fiduciary, Surcharge of Fiduciaryby Carol Warnick
It is very difficult for a trustee to have conflicts of interest without breaching the duty of loyalty. We typically think of trustee conflicts as they relate to self-dealing by the trustee, which is almost always a problem and for which the beneficiaries can obtain redress. But I have seen more conflicts lately in my practice where a trustee is trustee of different trusts that have conflicting interests, or the trustee is serving as trustee of a trust and also as personal representative of an estate whose interests are in direct conflict with each other.
When faced with a conflict situation, a trustee needs to take action before he or she breaches the duty of loyalty, which is a bedrock duty owed by all fiduciaries. Restatement of Trusts § 78 (1) states that a “trustee has a duty to administer the trust solely in the interest of the beneficiaries . . . .” That is not possible when the two trusts (or the trust and the estate) have conflicting interests and what the fiduciary does as trustee of one trust would be detrimental to the other. One example would be engaging in a specific transaction that is beneficial to the beneficiaries of one trust but harmful to the beneficiaries of the other trust or of the estate. Read more
No Contest Clauses – Not Just for Wills
/in Administration of Estate, Administration of Trust, Court Procedures, Fiduciary Discretion, Fiduciary Duties, Fiduciary Litigation, Personal Representative, Trustee, Will & Trust Constructionby Matthew Skotak
Fiduciary litigation continues to grow and often times outpaces the development of case law regarding the myriad of issues that arise in estate and trust disputes. Historically fiduciary litigation involved disputing family members or changes in family circumstances. However, another frequent source of litigation is the estate planning documents themselves. For this reason, estate planners often include a no contest clause, or in terrorem clause, in a will or trust as a means of deterring feuding beneficiaries from challenging the validity of the instrument; yet, enforcement of these no contest clauses carries its own burden.
A no contest clause is more frequently contained in a will, although it can also be prudent to include these provisions in trusts – especially when the underlying concern is to discourage litigation over the decedent’s estate plan by disinheriting a person who unsuccessfully contests the will and/or trust. The enforceability of these provisions varies from state to state; however, Colorado has determined that a no contest clause is valid when the contesting party lacks probable cause to bring their challenge. See Colo. Rev. Stat. §§ 15-11-517, 15-12-905. Read more
Holland & Hart Private Client Group Adds a New Associate
/in UncategorizedHolland & Hart LLP welcomes Lauren Morris as a new associate in the Private Client Group. Lauren joins us from Chicago, Illinois, where she previously practiced as an associate in the Trusts and Estates group of Hamilton Thies & Lorch LLP. Her experience includes drafting estate plan documents, developing wealth transfer strategies, administering estates, trusts, and guardianships, assessing corporate fiduciary risk, counseling clients on various tax matters, preparing premarital agreements, and representing clients in contested estate and trust litigation.
Prior to her experience at Hamilton Thies & Lorch LLP, Lauren was an associate with Horwood Marcus & Berk Chartered, where she practiced in estate planning and probate administration. In addition to practicing law, Lauren has several years of experience as a trust administrative officer with U.S. Trust, Bank of America Private Wealth Management. Read more
Please Join Us at the Holland & Hart Wine and Dessert Reception!
/in Uncategorizedspecial wine and dessert reception at the 2018 Estate
Planning Retreat with your friends from the Trusts and Estates Litigation Group. Guests will indulge in a selection of delectable desserts paired with spectacular wines and other non-alcoholic refreshments.
Park Hyatt Beaver Creek Resort & Spa
Crooked Hearth Private Dining Room
136 E. Thomas Place
Beaver Creek, CO 81620
Holland & Hart Hosts:
David Crandall, Partner
Margot Summers Edwards, Partner
Kami Pomerantz, Partner
Carol Warnick, Partner
Matthew Skotak, Associate
Morgan Wiener, Associate
Suzanne Coffman, Paralegal
Jody Hall, Paralegal
Prudently Investing: What Trustees Need to Know
/in Administration of Trust, Fiduciary Discretion, Fiduciary Duties, Fiduciary Litigation, Trusteeby Matthew Skotak
Acting in the best interests of the trust and the trust beneficiaries, a trustee has the duty to protect and preserve trust assets and, generally, to make the assets productive. In making investment decisions and managing trust assets, the trustee must further abide by the “prudent investor rule,” which requires a trustee to exercise reasonable care, skill and caution. See Colo. Rev. Stat. §§ 15-1.1-101, et. seq. (the “Uniform Prudent Investor Act”) and §§ 15-1-1101, et. seq. (the “Uniform Management of Institutional Funds Act”).
Pursuant to the prudent investor rule, a trustee should consider broad investment factors, such as: current economic conditions, effects of inflation or deflation, tax consequences, the nature of closely-held business interests, alternative investments, expected returns on income and capital, other resources of the trust or trust beneficiaries, the need for liquidity versus preservation of capital, the production of income, the special value or relationship of a particular asset to the trust or the beneficiaries, diversification of investments, and more. See, Restatement (Second) of Trusts § 227. Additionally, while it is important to note that Colorado courts have not officially adopted the Restatement (Third) of Trusts, one could refer to § 90, which lists five helpful “principles” of the prudent investor rule. Generally, any single investment will not violate the prudent investor rule and the trustee should manage the trust portfolio as a whole taking into account these considerations. Read more
Same Quality. Same Service. New Name!
/in Uncategorized