Attorney Acting as Executor May Have Breached Fiduciary Duty, but Didn't Violate Rules of Professional Conduct

Illinois' highest court dismisses disciplinary charges against an attorney who, as executor of his father's estate, made unauthorized loans to himself and distributions to his mother and sister.  While the attorney may have breached his fiduciary duty, he did not violate rules of professional conduct. In Re Karavidas (Ill., No. 115767, Nov. 15, 2013).

Theordore Karavidas, a personal injury attorney, was named executor and trustee of his father's estate. The estate documents provided that the estate would pour over into a trust and that the trustee would form two separate trusts, a family trust and a marital trust. Mr. Karavidas never transferred estate assets to the trust, and instead made loans to himself and distributions to his mother and sister without court approval. The court eventually removed Mr. Karavidas as executor and trustee.

The state bar disciplinary committee filed a complaint against Mr. Karavidas, charging him with conversion, breach of fiduciary duty, and violating rules of professional conduct. The hearing board concluded he was guilty of conversion and breach of fiduciary duty and recommended a four-month suspension. The review board recommended that the charges be dismissed because there was no proof Mr. Karavidas violated rules of professional conduct when he committed the conversion and breach of fiduciary duty.

The Illinois Supreme Court dismisses the charges against Mr. Karavidas, holding that breach of fiduciary duty is not a basis for professional discipline without evidence that the attorney violated professional rules of conduct. According to the court, while Mr. Karavidas may have breached his fiduciary duty, "because he was not acting as an attorney and he was not involved in the judicial process at the time of the breach, [he] did not undermine the administration of justice" and therefore did not violate professional rules of conduct.

For the full text of this decision, go to: https://www.state.il.us/court/Opinions/SupremeCourt/2013/115767.pdf.

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