A fiduciary is a person or organization trusted to act on another’s behalf in managing assets. This position requires an extremely high level of trust and loyalty since the fiduciary is given a legal right to act on behalf of those he represents. Usually, the fiduciary is placed in charge of financial assets and can include anyone who is responsible for managing money for another person. In most situations financial advisors, bankers, attorneys and accountants all have fiduciary power. All these positions have one important similarity—they are required to put any personal opinions and motivations aside to ensure your intentions are being upheld.
Here are some common duties of a fiduciary.
Executor
An executor is fiduciarily responsible for settling your estate according to the directions specified your last will and testament. If you have not designated an executor at the time of your death, the court will appoint someone to that position—usually a bank or trust company. The named executor is responsible for gathering all assets, settling all debts and distributing your estate according to your last will and testament.
Trustee
A living trust is a legal document in which you place assets in a trust for your lifetime. After your death, the assets in your trust are then transferred to designated beneficiaries. The person who manages these assets during your lifetime and distributes them after your death is called a “trustee.” As a fiduciary, this trustee is legally obligated to act within the confines specified in the living trust. Once you pass, the trustee is then fiduciarily responsibilities for the beneficiaries. He will be responsible for managing their assets in accordance to your wishes.
Guardians
If you were to pass while your children were still minors, a fiduciary would be responsible for their care. This individual can be designated in your living will or last will and testament. It’s important to note that the fiduciary does not have to be the same individual or company in all circumstances. For example, while you might want to make your banker your trustee in the case of your living trust; you probably don’t want him becoming the legal guardian of your children. However, if you’re married, you could name your spouse the fiduciary in all estate planning circumstances. This would mean he would be your trustee, executer and legal guardian of your children. Other prefer to name other individuals as fiduciaries when it comes to minor children. These could include other relatives or godparents.
There are countless other fiduciary responsibilities across a variety of situations from law to medical care, and an estate planning lawyer can explain this to you in detail. All designated fiduciaries have a legal responsibility to maintain your trust and can be held liable if they are found to be acting outside of your intentions.
Thanks to Brandy Austin Law Firm, PLLC for their insight into estate planning and fiduciary.