Probate & Trust Law Section Conference Manual ... - Minnesota CLE

also been the sole personal representative of the estate of decedent’s
housemate, who had predeceased decedent. Business owner made a
$5,000 gift to employee from the housemate’s estate and also made loans
to himself from the estate accounts. Furthermore, business owner and
employee billed decedent’s estate for their services at the company’s
normal rates, despite there being no evidence that these rates were
reasonable for personal representative services. Finally, business owner
and employee charged decedent’s estate personal representative fees in
addition to these hourly service charges. Beneficiaries of both estates
objected to the final estate accountings submitted by business owner and
employee. The district court found that business owner and employee
breached their fiduciary duties with respect to their administration of both
estates for charging at excessive billing rates, engaging in conflicts of
interest, and double billing. Business owner and employee were held
jointly and severally liable for the damages to the estates. Employee
appealed. As to the $5,000 gift that was made to her from housemate’s
estate, employee contended that because she was not a personal
representative of housemate’s estate, she owed that estate no fiduciary
duty and should not be liable for its $5,000 loss. She argued that Minn.
Stat. § 524.3-712 provides that only a personal representative is liable to
interested persons for damage resulting from a breach of fiduciary duty.
The court noted that employee was a personal representative of decedent’s
estate and certainly owed that estate a fiduciary duty; the $5,000 employee
received from housemate’s estate was destined for decedent’s estate (since
decedent’s estate was the sole beneficiary of housemate’s estate). So by
retaining the money, employee breached her duty to decedent’s estate and
the court found it proper to remedy that breach by ordering employee to
repay the rightful end recipients of the converted funds. As to the
overcharging and double-billing of decedent’s estate, employee contended
that she ought to be held to some lower fiduciary standard (rather than the
normal “prudent person” standard) because business owner, the other
personal representative, had the real authority over the improper decisions,
as he made them in the context of his role as employee’s supervisor.
Employee argued that she was subject to potential termination if she
objected to his decisions. The court rejected the notion that a fiduciary
must prudently protect the funds entrusted to her only if prudence is in her
own best interests. Rather, a fiduciary must put the interests of the estate
above her own. Consequently, the court held it was proper to hold
employee jointly and severally liable for the losses to decedent’s and
housemate’s estates.
Q. Expenses in Estate Litigation: 3-720
1. *In re Estate of Holmberg, 823 N.W.2d 875 (Minn. Ct. App. 2012). A
person who was not nominated as decedent’s personal representative
cannot be awarded payment for attorneys’ fees incurred in challenge
to will because such individual was not nominated as personal
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