## Facts

- Stephen L. Baldwin, domiciled in Maine, died on May 30, 1979, in an airplane crash.
- Baldwin’s 1977 will named The Connecticut National Bank as executor and divided the estate into two equal shares: one for his widow, Tracy C. Baldwin, and one for his three minor children from a prior marriage.
- Shortly before his death, Baldwin bought and operated the Port Clyde General Store, a seasonal “mom and pop” business that was a central estate asset and included associated real estate.
- The store was operated through a closely held corporation (Stephen held 90% and Tracy 10%); Baldwin owned the store-related real estate personally.
- After Baldwin’s death, Tracy continued living above the store and running the business.
- The children lived out of state with their mother, who asked the bank to supervise Tracy’s management and protect the children’s interests; the bank declined to take an active supervisory role.

## Issues

1. Whether a professional, institutional executor breached its fiduciary duty by failing to investigate and actively supervise the estate’s principal, management-intensive business asset operated by a co-beneficiary.
2. Whether that breach warranted a surcharge against the executor to compensate the beneficiaries.

## Decision

- The Supreme Judicial Court of Maine reversed the probate court.
- The court held the bank executor was subject to a higher standard of care than a lay executor and failed to meet that standard.
- The probate court’s finding that the bank met its fiduciary obligations was clearly erroneous.
- The case was remanded for determination of an appropriate surcharge against the executor.

## Legal Principles

- An executor must administer estate assets prudently and loyally for all beneficiaries.
- A professional or institutional executor is held to a higher standard of care because it holds itself out as having special skills and resources in fiduciary administration.
- When an estate’s principal asset is a closely held, risk-bearing operating business, the executor’s duty includes reasonable investigation and active supervision, not passive reliance on an interested party’s management.
- The executor must take protective steps to prevent one beneficiary’s control of an estate asset from impairing other beneficiaries’ interests, especially where minor beneficiaries cannot protect themselves.
- A surcharge is an available remedy when a fiduciary’s breach causes or risks financial harm to the estate or beneficiaries.

## Conclusion

The court ruled that a bank serving as executor must exercise professionally diligent oversight of a closely held business that constitutes a major estate asset, and that failing to investigate, require meaningful accounting, and implement safeguards—particularly where minors are beneficiaries—can justify a surcharge and remand for calculation of the loss.


Estate of Baldwin, 442 A.2d 529 (Me. 1982)