APPROACHING ZERO TOLERANCE

October 2, 2012 § 6 Comments

If you have gotten the impression that many chancellors are tightening down on the handling of fiduciary matters, it’s not just your imagination or overactive paranoia glands. More and more chancellors across the state are approaching zero tolerance for sloppy handling of estates, guardianships and conservatorships.

There are several reasons for this. One, and perhaps paramount, is that it is the judge’s job. But here are several others:

  • There is the case of attorney Michael J. Brown, of Hinds County, who helped fritter away hundreds of thousands of dollars of a ward’s account.
  • There is the case of the lawyer in jail in Rankin County who has been unable to account for fiduciary funds, and who will begin serving federal and state sentences therefor as soon as Judge Grant releases him from his civil contempt sentence — which is contingent on his accounting.
  • There is the case of another lawyer in Rankin County who refuses to account for fiduciary funds, and who is likewise cooling his heels in the county bastille until he complies.
  • There is the case of the lawyer on the coast who committed suicide when the questions started floating about how fiduciary matters in his charge were handled, and the last I heard the missing funds are more than $1.2 million.

The genius of our fiduciary system in Mississippi is that it creates a three-tiered system of protection for the ward or beneficiaries. The fiduciary is bonded (in most cases) and is accountable to the court; the lawyer works with the fiduciary, providing advice, guidance and oversight to see that the law is followed; and the court authorizes actions, demands and approves accounts and inventories, and scrutinizes the actions of both the fiduciary and the ward. Whenever any one tier fails, it is up to the other two to catch and fix the failed part. When judges wink at incompetent legal work in fiduciary matters we are shirking our duty to innocent beneficiaries, creditors and people who are unable to protect their own interests.

It’s not the stuff of movies and detective novels that money is stolen from fiduciary accounts. I have seen it right here in our little backwater, and I am sure it is happening and has happened in yours (not meaning that you live in a backwater).   

Fraud and mishandling of funds thrive in the sloppy handling of fiduciary matters. When you leave it up to the fiduciary to go about unaccounted for and unadvised and unsupervised, you are inviting trouble. And chancellors are becoming ever more vigilant and intolerant.

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§ 6 Responses to APPROACHING ZERO TOLERANCE

  • Ken says:

    I know it’s super late to comment on this post, but I was in Rankin County talking to a client in jail. I asked her about a prior legal matter she had dealt with over a decade ago. She couldn’t tell me much, so I asked who handled it for her. She pointed at an inmate walking by and said “That guy.”

    She said the look on my face alone was worth my fee.

  • [...] Five Mistakes that Fiduciaries Make … Five More Mistakes that Fiduciaries Make … Approaching Zero Tolerance … and … Essential Procedures in Guardianships and [...]

  • The use and abuse of powers of attorney avoiding the protections afforded by our courts is a significant problem for our elderly. Many folks don’t understand that a fiduciary has to put the ward’s interest first and is required to account to the ward. Occasionally, attorneys should decline to prepare documents which would leave the ward vulnerable and recommend the protections our courts can afford.

    • Larry says:

      I agree 100%. Another point lawyers shoould advise clients about re POA’s: when the atty-in-fact’s actions are called into question, the atty-in-fact will be held to the same standard of care as a court-appointed fiduciary, with the same requirements and liabilities. Yet most people, lawyers and laypeople, overlook the liability angle when doing POA’s without much thought. Thanks for your comment.

  • “When judges wink at incompetent legal work in fiduciary matters we are shirking our duty to innocent beneficiaries, creditors and people who are unable to protect their own interests.” Well said. It’s a good thing for chancellors to be more vigilant. Not that I’ve never made a mistake, but I’d rather the problem be caught and fixed than slip through the cracks.

    I hope that, in their vigilance, the chancellors will move toward applying the law and chancery court rules and not their own arbitrary requirements. I would like to see a system of uniform, consistently applied rules in lieu of the “it depends on the judge/county” system that, for all practical purposes, is currently in place across the state.

    • Larry says:

      Conscientious lawyers and fiduciaries who make mistakes are not the problem here. Judges will work with lawyers and fiduciaries to correct good-faith errors as far as possible. The problem is with lawyers and fiduciaries who have something to try to hide, or who neglect their duties.

      As for variations among the districts, that’s a function of the discretion and scope of judgment that the statutes and rules afford to judges. I’ve heard the same grumble for years (often voiced by myself when I was in practice), but I can’t imagine how to address it effectively without removing all discretion from the chancellors.

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