Swallowtail at Chatfield
Last week I attended the quarterly meeting of the Colorado Guardianship Association, of which I am a member. The CGA is a nonprofit that is a multidisciplinary group of attorneys, professional fiduciaries (like the folks who serve as trustee, agent under a financial power of attorney, agent under medical power of attorney, etc.), professional guardians, as well as others involved in the provision of services for elders and disabled adults. We have had some good programs and attorneys receive continuing legal education credit for attending, in addition to meeting with other professional with whom we have much in common and where we can discuss best practices.
The presentation was given by the Hon. C. Jean Stewart, the retired judge of the Denver Probate Court and the current president of the National College of Probate Judges. It was a great topic (even if it might sound technical) and Judge Stewart is an excellent presenter.
Since I am rather fond of Rudyard Kipling’s “six serving men” (from The Elephant’s Child, one of the Just So Stories) – also sometimes referred to as the “five W’s” (one man short obviously) I will use them to illustrate the components of the statute. The first serving man is “what.” In case you’re wondering, the cite for the statute is Colo. Rev. Stat. §15-10-601. Part six is titled Compensation and Cost Recovery.
Second, I’ll look at “where” – this is in the Colorado probate code, and so it concerns fiduciaries (the “who”) serving in proceedings in probate court including estates of decedents, trusts, protected persons, principals (makers of powers of attorney) and others under the Colorado Probate Code (CPC). So that is where we consider the context for this act among the components of what might be identified as “who:” it concerns an “estate” (whether a decedent’s estate, trust, or another person whose affairs are subject to the CPC); in which a “fiduciary” is the recognized actor on behalf of the entity or person (estate); and finally, section 601 goes on to define by way of illustration what a “governing instrument” for purposes of this section might be. These definitions really reflect both the who and the where – in what type of proceeding is the fiduciary acting.
So, to cut to the chase, this statute essentially addresses HOW fiduciaries are paid. Helpful to note here is the new JDF form for use in trusts & estates filings in the Colorado Judicial system which pertains to the application for probate, like the JDF 910 for example, which now has two separate inquiries regarding compensation – one for compensation of the personal representative and for the counsel of the personal representative.
Next up is the “why” – which was one of the most important messages of Judge Stewart’s presentation. The reason why attorneys and fiduciaries need to be familiar with this statute: to establish and maintain transparency so people know how much things are going to costs; and to give a baseline for how to determine reasonableness. Section 603 of the statute addresses quite a few relevant factors in determining the reasonableness of compensation and costs charged to or paid by an estate. What struck me about the message regarding transparency was that it could ease many of the concerns around our system of simplified probate in which sometimes persons take advantage of the lack of judicial supervision. In fact, some of us who represent fiduciaries in our practice (say for example, a client who is personal representative of an estate) include language in our engagement letters regarding fiduciary malfeasance and its consequences on our continued representation.
Finally, I’ll wrap up with the last serving man here – “when.” This involves among other things a consideration of when a family member fiduciary can expect to be paid for his or her work for an estate. This concerns the concept of providing a benefit to the estate – which is an idea that applies to both professional and nonprofessional (family member) fiduciaries. What I found particularly interesting here was our presenter’s assumption that family member fiduciaries are presumed to be performing their work as fiduciaries for the love and affection of/for the family member. This had interesting implications for several of us as there seems to be a shifting consensus regarding the payment of family members for their work.
What I particularly enjoyed about the presentation was that it pointed out there are no easy answers with this statute and that if we are to assess the value of another person’s work we need to consider the previously mentioned transparency along with the importance of clarifying expectations by having a conversation or setting forth processes which will be followed.
©Barbara Cashman 2014 www.DenverElderLaw.org