Fiduciaries and Their Role in Your Estate

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A fiduciary is any person or institution that has the power to act on behalf of another in situations that require great trust, honesty, and loyalty. Fiduciaries include accountants, attorneys, bankers, business advisers, financial advisers, mortgage brokers and real estate agents. These individuals are hired to act in your best interests and must set aside their own personal motives in favor of your goals and well-being.

Fiduciaries in Estate Planning

Fiduciaries can serve in any number of roles, both before and after your death. 

  • A personal representative or executor: This fiduciary is responsible for settling your estate in accordance with the directions contained in your last will and testament. You can appoint one or more individuals and/or an institution, such as a bank or trust company.
  • A trustee or successor trustee: This fiduciary is responsible for managing assets that you've placed in a living trust. He must act in accordance with the directions you've included in the trust agreement. This can be one or more individuals and/or an institution, such as a bank or trust company. Many people act as their own trustees when they create revocable living trusts, appointing successor trustees to take over in the event they become incapacitated or at the time of their deaths. 
  • A health care agent or surrogate: This fiduciary is responsible for making medical decisions on your behalf in accordance with the directions you've set out in your advance medical directive, also sometimes called a medical power of attorney or durable power of attorney for health care. This fiduciary can't an institution, and he can't be a health care provider who is currently treating you.
  • An attorney-in-factAn attorney-in-fact, sometimes called your agent, is responsible for managing assets that are titled in your individual name in accordance with directions that you've included in a power of attorney. It can be one or more individuals and/or an institution, such as a bank or trust company
  • A preneed guardian: This individual is responsible for taking care of you and your property if the court determines that you're mentally incompetent and in need of a to manage your affairs. This would be the case if you did not have a living trust. You can designate this fiduciary in a free-standing legal document, in an advance medical directive, or in a medical or financial power of attorney.
  • A guardian for minor childrenThis fiduciary is responsible for taking care of your minor children in the event you die while your children are still minors. You can designate this fiduciary in your last will and testament. 

In some cases, you might name the same person to serve as fiduciary in all your estate planning documents. For example, if you're married, you might name your spouse in all capacities. Otherwise, you may decide to name different people or institutions to serve in different capacities.

It's important that you choose one or more alternate fiduciaries in case your first choice can't or doesn't want to serve, and you should always check with the person or entity you're thinking of appointing first so you have a clear understanding of their feelings on the matter. A court will select someone else for you if any of your fiduciaries decide not to serve when they're needed.


Breach of Fiduciary Duty

These are just some examples of fiduciary duties. Technically, anyone can be your fiduciary when you entrust him to commit an action or actions on your behalf and in your best interests. 

It's against the law for a fiduciary to betray this trust. Lawyers can be disbarred for breaches of fiduciary duty, and personal fiduciaries, such as the executor of your estate, may be held financially and civilly responsible for taking actions that are not in line with your best interests.