What are they, and should you agree to serve as one?
A very simple definition of fiduciary is one who acts on behalf of another. A fiduciary is held to a high standard of care and trust in his or her role.
Common fiduciaries in probate and estate planning are Agents acting under a financial Power of Attorney, Patient Advocates acting under a medical Power of Attorney (Patient Advocate Designation), Personal Representatives managing a decedent’s probate estate (either nominated in the Will or appointed by the court), and Trustees managing a trust estate.
These fiduciaries are the people you trust to carry out your wishes. You may choose different people to serve in different fiduciary roles.
For instance, you may have one individual close to you who would best be what are they, and should you agree to serve as one?
Fiduciaries suited to make your medical decisions in your incapacity, but another loved one may be more financially savvy and organized, thus making that person more appropriate to serve as your Personal Representative, Trustee and/ or Agent under your Power of Attorney for financial matters.
In general, these arrangements work out very well to let an individual’s wishes be known in the event of an illness, disability or death. When family members learn their loved one cared enough to get their planning done ahead of time, most respect what their loved one had prepared, and many are relieved to know that there will not have to be a lot of guesswork involved.
I strongly believe having your wishes laid out in writing before something happens takes a load off of loved ones during a stressful and chaotic time, such as a severe car accident or sudden serious illness, or at your death when people are mourning. The fewer decisions that have to be made (or argued over) during such a time, all the better.
As discussed above, choosing a fiduciary takes serious consideration as to peoples’ strengths and abilities. The choice cannot be made lightly. If someone has named you as one of their agents, know that while you may feel a genuine compliment to have been thought of highly enough to be nominated, with that honor comes great responsibility.
A fiduciary is entitled to, and definitely should take advantage of, representation by counsel to be sure to properly carry out their fiduciary duties. There are many pitfalls an unrepresented person may face, without even realizing it. It’s one of those things that you don’t know what you don’t know!
Fortunately, the fiduciary can often pay their attorney from the principal’s assets, as the attorney services for the fiduciary are truly benefitting the principal.
One very common pitfall I see unrepresented fiduciaries get tripped up on is not completing the administration of a decedent’s probate or trust estate timely. Often, an unrepresented trustee is unsure of all of the duties and steps necessary to complete an estate administration after death.
That may lead to significant delay, and at times, lead to the fiduciary using their role as a means of “getting even” or exerting power over other family members, where a long history of strained relationships comes into play.
The fiduciary may very well violate their duties by not providing required information to the beneficiaries, such as an initial Inventory of all estate assets, and detailed annual accounts outlining the financial activity of the estate.
Most estates can and should be wrapped up within one to two years, but many remain open year after year for no valid reason. Completing the estate administration expeditiously is only one of a fiduciary’s duties. There are many others. If you have been nominated to serve as fiduciary and would like to learn how to protect yourself from violating your duties, please give us a call to schedule a consultation!