Did you sign up for this when you agreed to be trustee?

In the Matter of DREXEL ANDREW BRADSHAW, Attorney Drexel Andrew Bradshaw was charged with five counts of misconduct related to his position as the successor trustee of a client’s trust and his involvement with a construction company that repaired the client’s home. The case demonstrates the liability exposure that fiduciaries have and the extent to which they have to defend their actions, even if those actions were appropriate and in good faith.

To summarize, Bradshaw became the court-appointed conservator and trustee of a trust for an elderly client ruled incapable of managing her financial affairs. The client lived in an older home in San Francisco that needed significant repairs for the client’s living ability and care. Bradshaw hired a construction company that he had helped the owner of the company start by providing legal services and initial funding loans. To pay for the repairs, Bradshaw petitioned the court to allow him to obtain a reverse mortgage (followed by a 2nd one two years later).

The [California] Office of Chief Trial Counsel of the State Bar (OCTC) charged Bradshaw with four counts related to his handling of the trust:

  • engaging in a scheme to defraud the trust,
  • breaching his fiduciary duties to his client and the trust beneficiaries,
  • misappropriation of trust funds, and
  • making several misrepresentations to the probate court and other government agencies.

The hearing judge found Bradshaw culpable of three of the charges (with the exception of misappropriation) and recommended that he be disbarred. Both Bradshaw and the OCTC appealed.

The appeals court found in Bradshaw’s favor and dismissed the case for “lack of clear and convincing proof.” In its ruling the appeals court stated:

Upon our independent review of the record (Cal. Rules of Court, rule 9.12), we do not find clear and convincing evidence to support culpability as to the charged misconduct. We reject OCTC’s premise that Bradshaw wanted to start a construction company and used his position as trustee to start his “corrupt” enterprise. Bradshaw served as the successor trustee for a client years after his firm drafted the client’s trust and estate plan, and only after the first two successor trustees were unable to serve. He managed the trust according to its stated purposes and terms in a reasonable and proper manner, including engaging a certified specialist in probate and trust law to assist him in his duties. Further, he adhered to his client’s clearly expressed desires to be cared for in her San Francisco home, and that the equity in the home be used to accomplish that goal. To that end, Bradshaw used the trust assets, which consisted mostly of the home’s $1.6 million equity, to provide his client with quality nursing care and for necessary repairs to ensure her safety in the home…

For the full transcript of this case, see http://www.statebarcourt.ca.gov/Portals/2/documents/opinions/Bradshaw_%2016-O-15558_%20Opinion_and_%20Order.pdf

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