Canon 5D provides:
D. Fiduciary Activities. A judge should not serve as the executor,
administrator, trustee, guardian, or other fiduciary, except for the estate,
trust, or person of a member of the judge's family, and then only if such
service will not interfere with the proper performance of judicial duties.
"Member of the judge's family" means any relative of a judge by blood,
adoption, or marriage or any other person treated by a judge as a member
of the judge's family.
As a family fiduciary a judge is subjected to the following restrictions:
(1) The judge should not serve if it is likely that as
a fiduciary the judge will be engaged in proceedings that would ordinarily
come before the judge or if the estate, trust or ward becomes involved
in adversary proceedings in the court on which the judge serves or one
under its appellate jurisdiction.
(2) While acting as a fiduciary a judge is subject to the same restrictions
on financial activities that apply to the judge in his or her personal
capacity.
This canon places substantial restrictions on the ability of judges
to serve as a trustee or other fiduciary.(2)
Judges may not serve as fiduciaries in non-family situations, even where
the amount of work involved is minimal. See Advisory Opinion No.
33 (judge should not serve as co-trustee of pension trust). Although judges
are permitted to serve as fiduciaries in family situations,
1. This subject was discussed in Advisory
Opinions No. 5 and 16, which have been withdrawn.
2. An explanation of the reasons for
these restrictions appears in Thode, Reporter's Notes to Code of Judicial
Conduct 87-88 (ABA 1973): when a judge appears as a fiduciary the judge
may appear to have an advantage over other litigants or lawyers in a proceeding
before a fellow judge; this risk justifies limitations on judges' fiduciary
activities absent important countervailing considerations, such as family
relationship.
Canon 5D(1)
advises against doing so if it would interfere with judicial duties or
lead to litigation in the judge's court. Canon 5D contains a relatively
expansive definition of family member for these purposes. Residence in
the judge's household is not required in order for a person to be considered
a member of the judge's family, nor must the person be related by blood,
adoption, or marriage. However, more is required than mere residence in
the household, longstanding affective ties, or an underlying business relationship.
Persons must be treated by the judge as a member of the judge's family
in order to be considered family members under this canon.
Newly appointed judges who are serving as fiduciaries when they
are appointed should refer to the Applicable Date of Compliance provision
set out at the end of the Code of Conduct. The compliance provision advises
newly appointed judges to "arrange their affairs as soon as reasonably
possible to comply with" the Code of Conduct and to do so in any event
within one year following appointment. This means that judges should discontinue
their service as nonfamily fiduciaries within a year of their appointment.
However, the compliance provision provides for an exception to this advice
in the following circumstances:
If, however, the demands on the person's time and the possibility
of conflicts of interest are not substantial, such a person may continue
to act, without compensation, as an executor, administrator, trustee, or
other fiduciary for the estate or person of one who is not a member of
the person's family, if terminating such relationship would unnecessarily
jeopardize any substantial interest of the estate or person and the judicial
council of the circuit approves.
Under Canon 3C(1)(c), judges are required to recuse in any proceeding
in which they know they hold a financial interest in a party, whether the
interest is held individually or as a fiduciary. Canon 5D(2) confirms that
judges acting as fiduciaries are subject to the same restrictions on financial
activities that apply in their personal capacity. A judge who serves as
a trustee is deemed to have a financial interest in all assets held by
the trust and, therefore, is required to recuse in cases where a corporation
whose securities are held by the trust is a party. In this event, the remittal
provisions of Canon 3D are not available; in other words, the parties may
not waive the judge's disqualification and permit the judge to serve. Judges
have an obligation under Canon 3C(2) to keep informed about their fiduciary
financial interests so they can recuse themselves when necessary.
Canon 5C(4) also bears on a judge's service as a trustee; it advises
that judges "should manage investments and other financial interests to
minimize the number of cases in which the judge is disqualified." A judge
who serves as a trustee may be able to divest the trust of holdings whose
retention would require the judge to recuse frequently, assuming this can
be done consistently with the judge's fiduciary obligations as trustee.
If not, and if the trust assets trigger frequent disqualifications that
prove disruptive to the court, the judge should consider whether he or
she may properly continue to serve or whether resignation would be appropriate,
consistent with the judge's obligations under Canon 5C(4).
A judge who is permitted to serve as a trustee for a family trust
may accept compensation for such service if the source of the compensation
does not give the appearance of influencing the judge in the judge's judicial
duties or otherwise give the appearance of impropriety, if the compensation
does not exceed a reasonable amount, and if it does not exceed what a person
who is not a judge would receive for the same activity. See Code
of Conduct for United States Judges, Canon 6. Such compensation must be
reported on the judge's annual Financial Disclosure Form and is subject
to the limitations on outside earned income set forth in the Ethics Reform
Act of 1989 and the regulations issued thereunder by the Judicial Conference.
See Judicial Conference Regulations Concerning Outside Earned Income,
Honoraria, and Outside Employment § 3 and Commentary ¶ 10. Although
these regulations also prohibit judges from serving as a fiduciary for
compensation, that prohibition does not apply to service "as an executor
or trustee of a family estate or trust as permitted by the Codes of Conduct
where the [judge] . . . does no more than provide the service that would
be provided by a lay person in the same capacity." See id.
However, even in the limited circumstances where judges may continue to
serve as a nonfamily trustee, as noted above, judges should not accept
compensation for service as a nonfamily trustee.
January 15, 1999