Yet no matter the form taken, fiduciaries have one incredibly important thing in common: They are tasked with protecting your best interests. The decisions your fiduciary makes will often have an enormous impact on your life, and the lives of your loved ones.
Let’s take a closer look at the role of the fiduciary, and what you need to know before selecting one.
How Fiduciaries Work
A fiduciary is a person who is granted rights and power on behalf of another person, and who must exercise trust and good faith when exercising those rights.
The role of fiduciary is the highest legal duty one person can have to another person. Fiduciaries are bound to act ethically and in the best interest of the person they represent. Financial advisors, accountants, estate executors, guardians and trustees are all examples of fiduciaries.
Here’s an example of how a fiduciary works in the context of estate planning. A person with minor children may wish to create an estate arrangement involving a trust and a beneficiary. Should this person die unexpectedly, their estate would be controlled by the trustee (a person acting as the designated fiduciary) on behalf of the beneficiary (the minor children).
The trustee is tasked to work on behalf of the beneficiary, making financial decisions that are in the best interest of the estate and the beneficiary until such time as the beneficiary comes of age.
Another example would be granting someone guardianship or power of attorney. In these cases, the person granted these roles is asked to make decisions on behalf of someone who is a minor, incapacitated or may have become incapacitated. These decisions may involve healthcare, finances, etc.
Why Choosing the Right Fiduciary is Important
Choosing the right fiduciary is imperative for one reason: People serving in these roles often have the power to make life and death medical decisions, or decisions that have far-reaching financial consequences. It’s essential to have fiduciaries who have good judgment and who can be trusted.
Because of the gravity of these decisions, it often makes sense to designate different people to serve in various fiduciary roles. For example, someone may wish to appoint one of their children as power of attorney, simply because that child lives nearby and can help with basic financial tasks. It may also be preferable to appoint a family member in close proximity to act as healthcare agent. However, with respect to executors and/or trustees, if estate and/or trust provisions are complex, it may make more sense to appoint a person or entity with financial and trusts and estates experience along with a family member as co-executors or co-trustees.
While many people choose friends or family members to fulfill fiduciary roles, sometimes it makes more sense to find a professional fiduciary.
Professional fiduciaries are objective, they do not have a personal stake in the process or a competing interest (much as siblings typically do) and they usually have extensive experience administering fiduciary functions.
Finding the Right Family or Estate Planning Attorney
At Brickley Law, we have the necessary experience to handle even the most complex cases. We also offer our clients peerless customer service with a sensitive and understanding touch. Contact us today for a free consultation.