Chayet & Danzo, LLC Chayet & Danzo, LLC
Law Pay

Call for a Free Initial Consultation

Direct 303-872-5980
Toll-Free 888-472-1088
Email Us


After careful review of the COVID-19 environment, the law firm of Chayet & Danzo, LLC, will be conducting in-person appointments in our offices on a limited basis and with strict social distancing protocols.

During this time, our team will continue to diligently work remotely on all client matters and will maintain communication through email, telephone, and video conferencing. Our main office number, (303) 355-8500 will continue to be answered during our normal business hours of 8:00 a.m. to 5 p.m. Monday - Thursday and 8:00 a.m. to 4:00 p.m. on Fridays.

This decision to have limited appointments in-office while following strict social distancing protocols is in the best interest and health of our team, clients and community.

We will continue accepting new clients during this period as well as fully servicing our existing clients.

We wish you and your family continued health during these unique and challenging times.

Compassion, talent and dedication: guiding colorado families and Their Trusted Advisors During Times of Need

Part II: Breach of fiduciary duty in a conservatorship

This is a continuation from our last post on whether a change of beneficiary designation was actually a mistake. In this post, we summarize the facts and discuss the duty of loyalty required in a fiduciary conservator relationship.

The recent Colorado Court of Appeals case detailed the facts. A brief summary is that an elderly mother changed her beneficiary designation on pay-on-death retirement accounts that contained the bulk of her estate assets (approximately $3 million). She left the accounts to a daughter who suffered from mental illness and at the time was homeless in Denver. The change resulted in a much smaller inheritance for her son and his children. 

A conflict of interest

Her son was upset that this beneficiary change effectively disinherited him from one-third of her estate, which would have flowed to a trust set up to benefit him and his children. He framed it as a mistake, which we discussed in our previous post.

The brother started a conservatorship action in Colorado. The court appointed him as his sister's conservator. In this role, he disclaimed the assets arguing they were at risk of being wasted or dissipated.

At this point, these assets became the property of the mother's estate and subject to her will (one-third directed to the brother's trust and two-thirds to a special needs trust for the sister). Supporting the petition, the brother argued that this would secure the funds. The court approved saying "[Sister's] assets will be placed in a Supplemental Needs Trust for [her] benefit."

Redistribution according to the will redirected one-third to brother's trust. And he moved the assets from a Roth IRA (about $300,000) to an account in the name of his children.

Two years later...

Sister moved back to New York, which required a parallel guardianship proceeding. At this time, sister asked about the $1 million brother diverted to his trust. Court appointed counsel filed a motion on her behalf to void the disclaimer.

After re-opening the case, the court approved a request for an independent accounting. An evidentiary hearing to consider if brother had breached his fiduciary duty as conservator also took place.

Disclosure of conflicted transactions is not enough

As conservator, the brother had the duty to manage his sister's assets for her sole benefit. This duty of loyalty does not allow a conservator to enter into financial transactions if they create a conflict between his fiduciary duties and his own personal interests.

Disclosure alone of conflicted transactions does not immunize a conservator from a later breach of fiduciary claim. These transactions must be fair and reasonable to the protected person.

Two million dollars instead of three

The brother acknowledged harm to his sister in that she had fewer available assets, but he still believed the disclaimer benefited her. The court was not convinced, citing his failure to look at options to protect her interests in the pay-on-death assets.

After the hearing, the probate court held that the brother's actions were "deceptive and undertaken in bad faith." The court ordered him to reimburse the value of diverted assets. On appeal, the probate court decision was upheld.

The fiduciary duty is serious. A civil theft statute trebles damages in these types of cases as well. Testing the system and pushing the envelope ultimately creates more risk.

No Comments

Leave a comment
Comment Information

Watch Our Firm Video

We are the premier Elder Law firm in the Colorado region. We set ourselves apart from other law firms in the area with our talent, dedication, compassion and ability of our attorneys to handle any case in Elder Law. We serve Colorado families with experience and dignity in your time of need.

View More Videos

Denver Office
650 S.Cherry St., Suite 710
Denver, CO 80246

Toll Free: 1-888-472-1088
Phone: 303-872-5980
Fax: 303-355-8501
Denver Law Office Map

Edwards Office
105 Edwards Village Blvd.
Edwards, CO 81632

Toll Free: 888-472-1088
Toll Free: 1-888-472-1088
Fax: 303-355-8501
Edwards Law Office Map

Aspen Office
600 East Hopkins Avenue
Suite 301
Aspen, CO 81611

Toll Free: 888-472-1088
Toll Free: 1-888-472-1088
Fax: 303-355-8501
Aspen Law Office Map

  • Rated by Super Lawyers Macro Chayet
  • Rated by Super Lawyers Frank J. Danzo, III
  • Member National Academy of Elder Law Attorneys, Inc. TM
  • Avvo Rating 10.0 Superb Top Attorney Elder Law
  • 2015 Five Star Professional Wealth Manager Multi-Year Winner
  • Our new 2015 Medicaid Book: how to protect your Family's Assets from devastating nursing home costs
  • Peer Review Rated For Ethical standards & Legal Ability TM Martindale Hubbell