While many testators provide clear direction on the administration of their assets and appoint trusted and responsible friends or family members as their estate trustees, there are many instances where these individuals ignore their fiduciary duties to the testator’s estate.
Paul Penna was a very wealthy and successful businessman who died in 1996. Penna appointed three executors to administer his $24 million estate. One of Penna’s executors was Barry Landen, a longtime employee of Penna’s whom he considered as his son.
Penna was survived by his disabled wife. He provided that $1 million from his estate should be left for her care and maintenance. The couple was childless. The rest of Penna’s estate was to be distributed amongst various charities.
Over the next seven years, it was discovered that Landen chose not to probate Penna’s Will and as such none of the charities had notices of their bequests. Landen helped himself to the estate assets without the knowledge of the other executors, banks, lawyers and accounts who were involved in the estate. He lived an extremely lavish lifestyle. While it is unclear why the other estate trustees were unaware of Landen’s actions, it is possible to assume that they trusted Landen to handle the winding up of the estate.
Justice Greer found Landen to be in contempt of 4 Orders of the Court. He was also found to have deliberately and willfully breached his fiduciary duties to the Estate and its beneficiaries. Justice Greer sentenced Landen to 14 months incarceration for contempt.
This case provides a powerful warning to estate trustees that they not only should be acting as fiduciaries of the estate they are administering, but that they are legally required to administer the estate properly. This includes keeping proper accounts of the estate assets and to notify creditors of any and all debts of the estate. Failure to do so could, as in Laden’s case, result in criminal sanctions.