Among OBLIC insured attorneys,  the area of practice with the highest number of legal malpractice claims continues to be probate, estate and trust. Addressing the duties and conduct of estate fiduciaries is an important aspect to prevent claims for this area of practice. In this article, we review a fiduciary’s duties and role.

Fiduciaries are governed by Chapter 2109 of the Ohio Revised Code.

A “fiduciary” is defined as any person appointed by and accountable to the probate court and

• • acting in a fiduciary capacity for any person, or
  • charged with duties in relation to any property, interest, trust, or estate for the benefit of another.

The duties of a fiduciary are those required by law, and such additional duties as the court orders. Letters of appointment cannot be issued until a fiduciary has executed a written acceptance of the fiduciary’s duties. Fiduciaries must acknowledge that they are subject to removal for failure to perform the fiduciary’s duties, and they are subject to possible penalties for conversion of property the fiduciary held as a fiduciary.

Whether the fiduciary is an executor or administrator of an estate, pursuant to Chapter 2113 of the Ohio Revised Code, they have duties to collect the assets of the estate, pay the debts, and distribute the balance to the heirs. It is a best practice not to distribute any assets until all debts are settled and paid. Fiduciaries also have duties of keeping account records and preserving assets, while not comingling property. If an executor or administrator neglects to sell personal property that is required to be sold, and instead retains, consumes, or disposes of it for his or her own benefit, he or she will be charged with the personal property at double the appraised value.

Recent hotline questions have presented challenging situations for the attorney representing the fiduciary of the estate. The attorney assists in the administration of the estate and advises the fiduciary on keeping accurate records. Problems often arise when it appears the fiduciary has inappropriately used or removed funds from the estate or otherwise mishandled estate assets.

The court may remove any fiduciary, pursuant to Sec. 2109.24 ORC, for failing to make and file an inventory, habitual drunkenness, neglect of duty, incompetency, or fraudulent conduct. If a fiduciary’s attorney detects improprieties in the performance of a fiduciary’s duties, steps can be taken to meet with the fiduciary client and review documents related to the conduct in question.

If it is determined that the fiduciary has engaged in improper conduct, pursuant to Prof. Cond. R. 3.3(b) the lawyer must take reasonable measures to remedy the situation, including, if necessary, disclosure to the tribunal. The attorney should consider asking the client to rectify the situation and restore any misappropriation. Balancing the attorney’s obligations pursuant to Prof. Cond. R. 1.6 and 3.3, it may be appropriate to  inform the court of the occurrence during a hearing where a record is made. The court can make a determination regarding the fiduciary’s status.

These matters often involve complicated fact patterns. As a benefit to OBLIC policyholders, ethics consults with outside ethics counsel are available to address specific situations. We’re here to help you navigate your ethical obligations while you protect your clients.

This information is made available solely for loss prevention purposes, which may include claim prevention techniques designed to minimize the likelihood of incurring a claim for legal malpractice. This information does not establish, report, or create the standard of care for attorneys. The material is not a complete analysis of the topic and should not be construed as providing legal advice. Please conduct your own appropriate legal research in this area. If you have questions about this email’s content and are an OBLIC policyholder, please contact us using the information above.