WHAT IS A FIDUCIARY?
A fiduciary is a person who assumes responsibility for a position of trust.
In What Specific Roles do Fiduciaries Serve?
Fiduciaries serve by court appointment as guardians, conservators and personal representatives of estates. They also serve by agreement as trustees, representative payees or as agents under powers of attorney.
- The fiduciary as trustee has the responsibility of carrying out the terms of the trust as set forth in a trust document. A trust can be created by the language found in a will or a document created during life. If the former, it is a testamentary trust; if the latter, it is a living trust. The trustee is usually a person named by the creator of the trust in the trust document. In some cases, the trustee cannot carry out his or her duties either because of incapacity or death. If there is no named successor trustee who can serve, the court has the responsibility of appointing a trustee, usually someone who is nominated by the trust beneficiary(s).
Trustee duties can include funding the trust with appropriate assets, safeguarding assets, investing the trust assets according to the Prudent Investor Rule (as set forth in the Probate Code), reporting to beneficiaries (as set forth in the Probate Code) filing income tax returns for the trust and making distributions in accordance with the trust terms.
- The Fiduciary as Conservator is the person who is legally appointed to manage the Conservatee’s estate and/or person. A Conservatorship is a legal tool to provide management for the financial and/or personal affairs of individuals deemed by the court to be physically or mentally incapacitated. A Conservatee is a person who is the subject of a conservatorship. A Conservator of the Person is appointed by the court to assume responsibility for decisions regarding the health and welfare of a person. A person is determined by the court to be incapacitated when he or she lacks sufficient understanding or “capacity” to make or communicate responsible decisions concerning his or her daily living needs. A Conservator of the Estate is responsible for the prudent use and protection of the conservatee’s assets. The conservator is responsible for inventorying, marshaling and managing all assets and benefits belonging to the Conservatee. The conservator receives income, pays obligations of the estate, applies for pensions, and organizes data for the preparation of income tax returns and other related duties.
How is a Conservator Appointed? Anyone who believes a person may need help with daily living activities and/or finances can initiate the process to appoint a fiduciary as a conservator. The concerned person may contact a fiduciary of choice to investigate the situation. If the fiduciary identifies sufficient need, he or she will retain an attorney to petition the probate court for appointment as conservator.
How is the Conservatee Protected? The probate court often appoints an attorney to represent the alleged incapacitated person. A court investigator is also appointed by the court to determine the need for a conservator and to recommend a suitable person to serve in that role. All issues and information are brought before a probate court judge who decides if the person is incapacitated or in need of protection and, accordingly, appoints a conservator. The appointed fiduciary is accountable to the court for his or her work. The fiduciary must report to the court and receive the court’s approval in carrying out his or her responsibilities. The court requires the posting of a surety bond by the conservator, which is intended to protect the assets of the conservatee’s estate.
- The fiduciary as personal representative is an individual appointed by the probate court to administer the estate of a person who has died, referred to as a “decedent.” A personal representative will either act as an Executor if named in the will, or as an Administrator if not named in the will, or if there is no will. The personal representative inventories and safeguards assets, collects income, verifies and pays obligations, identifies and notifies heirs and beneficiaries, and distributes assets.
- The fiduciary as representative payee is a person designated by the Social Security Administration or other retirement plans to receive the income and pay the expenses of an incapacitated individual.
- The fiduciary as Agent Under Power of Attorney. The responsibilities of a fiduciary acting as an Agent under Power of Attorney include the following: For health care, the fiduciary acts as attorney-in-fact to make health-care decisions, including placement, medical, treatment and final burial arrangements. More recently an Advance Health Care Directive provides this guidance. For financial matters, the fiduciary conducts personal and financial business pursuant to the client’s written instructions.
Who Oversees Fiduciaries?
Private Fiduciaries are governed by state statute. Each California county has Probate Court as part of its Superior Court system. Courts may appoint a PFAC member as a neutral third party to protect vulnerable and incapacitated people from abuse, neglect and exploitation. PFAC members must abide by the PFAC Code of Ethics.
Cost of Services
In most court-supervised cases, the Probate Court approves reasonable fees. In non-court-supervised cases, fees may be addressed in the estate planning documents. Each Fiduciary has their own fee schedule which they will provide to any potential client.
Who needs a Professional Fiduciary?
It is said that there are 26,000 “orphan” seniors in San Diego alone. And many seniors with family choose to appoint a Professional Fiduciary to avoid burdening family members. Even the most capable adult child is frequently fully committed to work and home responsibilities and may not live conveniently nearby. And, of course, many family members would not be a good choice for fiduciary work due to the lack of appropriate skills or the potential for conflict with siblings or other relatives.
How Do You Select a Qualified Fiduciary?
All fiduciaries affiliated with the Professional Fiduciary Association of California (PFAC) must fulfill education and experience requirements. In addition, PFAC members are governed by a Code of Ethics. PFAC members must meet annual educational requirements and standards set by the organization.
PFAC’S Mission Statement
The mission of the Professional Fiduciary Association of California is to advance best fiduciary standards and practices.
Statement of Purpose: The purpose of the Professional Fiduciary Association of California is:
- Ensuring the highest standards of ethics and practice
- Maintaining high qualifications for membership
- Requiring and providing continuing education of members
- Enhancing awareness of and respect for the Professional Fiduciary Association of California and its members
- Contributing to the development and support of effective regulation, legislation and licensing
- Promoting communication among members to share resources
- Mentoring new members
Where Do You Find a PFAC Member?
PFAC members are located throughout the State of California. To locate a PFAC member nearest you, click here or on the FIND A FIDUCIARY tab on the menu bar.