Recent SD Supreme Court Estate Ruling

On February 10, 2010, the South Dakota Supreme Court filed an opinion on a will-contest case.  This case will help teach you about two important terms that we use in the legal community.  The first is what is called a “Personal Representative”.  The second term is “fiduciary duty.”

This particular case was very complicated, and so I won’t waste too much of your time on delving on the facts and background. In 1997, Walter Brownlee passed away and left a Will that devised the bulk of his estate to his children and grandchildren, with his Certificates of Deposit (C.D.’s), residence, and most of his personal property going to his long-time companion, Jeanie Weekley.  Over time, Weekley felt that the Personal Representative was doing a poor job in handling the estate, and sued him for negligent administration of the estate.

Before we get too far ahead of ourselves, let’s discuss what a Personal Representative is, and what his or her responsibilities are.  A Personal Representative, also known as the executor or executrix, is the person who is designated in the Will to carry out the estate plan.  In other words, he or she makes sure that everyone who is devised money gets that money, and takes care of the estate’s assets.  He will pay off creditors, handle various paperwork duties, and deal with the probate court. 

Personal Representatives also act in a “fiduciary duty” on behalf of those having an interest in the estate, and to act in the best interest of the beneficiaries of the estate.  To put it differently, the Personal Representative has an obligation to manage the assets of the estate in a reasonable matter, so that those who are devised those assets get the most out of them.  If the Personal Representative fails to reasonably perform his fiduciary duty, he is liable to interested persons, or those who have an interest in the will, for the damage or loss resulting from his breach of the fiduciary duty. 

In this case, the court found that the Personal Representative did in fact breach his fiduciary duty to Weekley, by failing to take possession of or preserve some construction equipment that were assets of the estate.  Originally, this equipment was worth over $100,000.  By the time the Personal Representative got around to selling it, it only netted $26,000.  This case is a great example of how a Personal Representative did a poor job of managing an asset that caused damage to an interested party.  Since it was the Personal Representative’s fault that the asset decreased in value, he was liable to Weekley for the difference. 

The lesson here is that a Personal Representative needs to do his job, because if he doesn’t, he may end up paying for it.