From Colorado

EDITOR’S NOTE:  The following testimony was presented at a Colorado public hearing scheduled as follow-up to a 2006 Performance Audit of the state’s probate system.  This presentation makes important observations and recommendations that apply and could be beneficial for any state.

Presentation to the Protective Proceedings Task Force
Proposal for Appointee Reform
September 2007

Thank you for your time and commitment to improving Colorado’s probate system.

I have three areas of concern:

  • First, every type of appointee – not just conservators and guardians – must be held to the highest level of accountability.  I’m referring   specifically to successor trustees, personal representatives and public administrators.
  • Second, we have an absolute need for solid data regarding the number of estates, number of appointees and their profits before these issues can be properly addressed.
  • Finally, we need a new oversight model that will implement accountability and take the profit out of the process.  Today, we have a system that creates a conflict of interest for appointees, encouraging them to put their own financial interests ahead of the interests of the parties.

Every Appointee Accountable

I’ve observed first hand the waste and lack of court oversight of a court appointed successor trustee.  I’m one of the citizens who requested the Performance Audit of 2006.  And I believe it’s imperative every type of court appointee be included under all accountability requirements.

Whenever funds are placed under the control of someone who receives income for his or her fiduciary activities, he or she must be held to the same level of accountability as conservators and guardians.  Anything less is an invitation for potential abuse.

I disagree with the comment on page 14 of the Performance Audit on Oversight of Probate Cases stating, “Since the provisions of a will or trust ‘typically’ dictate the activities of personal representatives and trustees, the statute only requires courts to supervise personal representatives and trustees when petitioned to do so by an interested party.”

Theoretically this sounds reasonable, but in practice it does not work.  The use of the word “typically” is an ill-defined guideline.

Judicial discretion in a court of equity must be utilized with extreme caution.  Harvard Law Professor Mary Ann Glendon says it well.  She contends judicial discretion in probate “ignores the intent of the testator, promotes intrafamily litigation, depletes estates, and brings disarray into a relatively smooth functioning area of the law.”  I agree.

I strongly urge amending the statute (Sections 15-12-502 and 15-16-201 (2), C.R.S.) to include every type of appointee.

Recommendation #4 of the Protective Proceedings Task Force proposes new templates for assisting interested parties with the procedures they must follow to petition the court for review of the activities of a personal representative or trustee.  I have some concerns about the recommendation.

I feel strongly an interested party should be able to simply write a letter to the court expressing their concerns and requesting a court review of the activities of any court appointee handling their affairs.

Recommendation #4 should also include a clear statement of what action the court will take once it receives a request for oversight.

The court, having made the appointment, presumably has faith in the appointee and may not feel obligated to review every request.  What assurance does an interested party have that there will be an accountability hearing or an investigation?  And what assurance does an interested party have that such a hearing or investigation will be fair and impartial?  In other words, interested parties should be able to count on a system that does not favor a court-appointed trustee simply because they were assigned by the court.

One local conservator puts it this way:   “If you can get in with the court, it’s a gravy train.” The families and other interested parties involved in probate are paying for this gravy train.  There should be no gravy train.

The Need for Data

The Colorado State Auditor reviewed 114 cases uncovering the potential for abuse that citizens can suffer at the hands of court appointees.

However, before we can begin to solve the problem, we need to understand the magnitude of the situation:

  • What amount of money is under the control of court appointees at any one time?
  • How many appointees are there?  How many cases do they control and what is the length of time they have each case?
  • What was the value of the estate when the appointee took control?  How much was spent during their appointment?  How much was charged in appointees’ fees and what was the ending balance?
  • Did appointees receive any referral fees for selling property or other services?
  • When a person dies without heirs how soon does the appointee notify the court?

The Denver Probate Office informed me that this information is not tracked.  To compile this information would require “weeks and weeks of work.”

This is completely unacceptable.  If we can not quantify the problem, how can we begin to fix it?  Lacking this information, every new procedure is simply a band-aid on an ever-growing wound.

In a report by the Washington, DC based National Center on Elder Abuse, Erica Wood of the American Bar Association’s Commission on Law and Aging found that a majority of the nation’s courts do not keep or share adequate records of things such as guardianship dispositions.

In other words, wrote Wood, author of Guardianship of the Elderly:  A Primer for Attorneys, “adequate case management of people affected by conservatorhips or guardianships is virtually nonexistent.”

Wood begins her analysis with a report by the US Government Accounting Office in 2004 that found what the GAO called “a grave lack of hard data on guardianship of vulnerable adults.”

“Nationally, Wood concluded, we are looking at guardianship ‘through a glass, darkly’, unable to make informed policy and (practical) choices without an adequate knowledge base of what exists and what trends are evident.”

And these deficiencies, if not corrected, will only increase with the growth of the elderly population, which is expected to double from 2003 figures to 71.5 million people over the age of 65 by the year 2030.

Part of Wood’s report drew from accounts by the Associated Press, which like the Los Angeles Times, tackled the guardianship/conservatorship issue, only at the national level, in 1987.  “Those figures are nearly 20 years old and remain today among the very few such national-level counts”, according to Wood.

The Los Angeles Times reviewed more than 2,400 separate conservatorship cases between 1997 and 2003 and found some 500 professional but unlicensed California conservators care for at least 4,600 people with assets totaling $1.5 billion.  Colorado needs an annual report on these critical details.

To illustrate how pervasive this problem is across the country, I have included articles from: California, Texas, and Colorado in the prepared materials.

The reason there has not been a national cry for reform of the probate system, is that only a handful of people, relative to the population, are affected at any one time.

Unlike taxes and the price of gas, only the people caught up in the probate system know the consequences of having someone else, frequently a total stranger, take over their affairs.  And many who find themselves in this position are not capable of complaining to the court.

Only when the system’s influence is more prevalent will there be a universal demand to end the process of fee-driven appointees taking over the checkbooks of the dead and incapacitated.

“May you have a lawsuit in which you know you are in the right.”   -  Gypsy Curse

In our case my father-in-law is dead, obviously not able to speak for himself.  He would be heartbroken at the tragic treatment of  his son (the co-trustee of his trust) and the complete waste of his estate though this system.

Conflict is normal, how it’s handled is what matters.  As an active member of the Colorado Council of Mediators and Mediator’s Organization, I believe in exploring all options before filing a lawsuit that will most likely destroy a family.  Probate Court should be about minimizing the impact of death and traumatic events on families by employing methods other than litigation to resolve conflict, such as:

  • Court meetings with the parties to allow clarification of the issues;
  • Mediation by a qualified family facilitator to facilitate discussions between the parties;
  • A court ordered cooling off period during which time the parties would be required to attend family counseling.

In short, it should be the ultimate goal of the probate court to help families avoid litigation through whatever means available.  Inserting an appointee and allowing a lawsuit to go forward should be the very last resort in resolving conflict.

Last year, I participated in a class taught by Judge Rebecca Love Kourlis at the Institute for the Advancement of the American Legal System.  In one session we discussed the process of role play between judges and attorneys to provide an appreciation of each other’s job.  I wish there was a similar way to have judges and attorneys experience the role of the individual caught in the probate system: the years of anxiety, loss of sleep, pure anger, sifting through piles and piles of documents – all of this while you grieve, try to live your life and work.  The process requires so much time and energy and is so laden with stress; it is akin to having a second full-time, high-pressure job.  In short, it is devastating.

“When money speaks, the truth keeps silent.”  -  Russian Proverb

I am sure there are good and honorable men and women providing the services of court appointees.  There are also many who are incompetent, unethical and seeking merely to pad their wallets.  This is a for profit business for those lucky enough to be “in with the court”.  Once appointed there is virtually no incentive to give up the job, it is after all how they earn their income.  Appointees have complete control of all the money and, for the most part, are without supervision and/or accountability.

A New Model

The courts are already overburdened and under funded.  It is unreasonable to require the Probate System to track the wide range of appointees and their business activities.  Moreover, appointee accountability should be left to someone other than the judges who make the appointment – particularly since they often appoint people with whom they have personal and professional relationships.

It’s time for a major change to address the problems of appointees’ mismanagement and corruption.  It’s time to restore trust and respect to the probate system.  I want to propose a new approach to the obligation of protecting those who find themselves at the court’s mercy.

I propose doing away with the current system of individuals with various backgrounds, credit ratings, abilities, and levels of experience – and who have a financial interest in maintaining control over the funds they’ve been appointed to oversee.

I propose creating an Office of Estate Management or Office of Public Administration in each judicial district.  This office would oversee all types of probate appointments, including successor trustees, personal representatives and public trustee/administrators.  I believe anyone with the title “Public,” should actually be a public employee, not someone in private practice with an inherent conflict.

The funds to pay for this new division would be derived from fees for estate management. The cost would be an annual percentage of the estate plus activity charges, all of which would be published and set by the Judiciary or Legislature.  As the caseload increased, so would the staff and operating income.  If we use California’s information of $1.5 billion worth of assets in the hands of appointees – 3%, for example, would be
$45 million to fund this new department.

The employees of this office would be State employees with regular payroll and benefits.  At least one employee in each office should be a Certified Public Accountant.

A portion of the agency’s budget would be set aside to pay for an annual audit of the estates under their control.  An office of this nature would relieve many of the demands on the court’s time and budget.  Furthermore, it would provide consistency and accountability.  Perhaps this should fall under the Legislative Branch to maintain checks and balances and avoid any conflict of interest.

The new office would implement the recommendations of the Protective Proceedings Task Force.  Monitoring and supervision of plans and reports with supporting documentation for fees and expenses would be provided on a regular timetable.

The risk-based model and standard practices for overseeing appointees would be applied to the new department.  Collaboration between the two entities on developing new forms and establishing a volunteer court visitor program would be invaluable.

Some of the comments regarding Recommendation #1 concerned additional funding and staff limitations.  As mentioned, I believe that protecting a person’s assets “in house” would provide the money to accomplish this task.

The need for new procedures regarding appointee compensation would not be necessary, other than providing guidance on the reasonableness of standardized fees charged by the new state agency I’ve proposed.

In Recommendation #3 the ideas pertaining to a probate facilitator and creation of an Office of Probate Services could be incorporated into this new model for serving the public.

“Power concedes nothing without a demand.  It never did and it never will.”  -  Frederick Douglass

Establishing a pool of qualified/licensed professionals in private practice will only perpetuate the belief that the probate system is a clique of appointees working too closely with the court.  This approach will do nothing to restore the public’s trust in the judiciary.

We know that the wave of Baby Boomers is going to substantially increase the number of cases in probate.  This is our moment to demonstrate that Colorado is serious about taking the profit out of asset management and having the highest standards in the United States for safeguarding the assets of its citizens.

Thank you.

Mo Scott

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