Estate Fiduciary Responsibilities
In estate planning, fiduciaries are individuals or entities entrusted with the responsibility to manage and protect the assets and interests of another person or entity. When deciding how to choose a fiduciary, you should first understand their role and responsibilities.
Trustees, executors, agents, guardians, and conservators are all types of fiduciaries with distinct roles. Their roles include the following:
- A trustee manages and controls assets held in a trust, making decisions about investments and distributions, always with the beneficiaries' best interests in mind.
- Executors administer a deceased person's estate, ensuring debts are paid and assets are distributed according to the will.
- Agents, often named in powers of attorney, make financial or health decisions when a person is unable to do so themselves.
- Guardians are appointed to care for minors or incapacitated individuals, making decisions about their welfare and personal needs.
- Conservators manage the financial affairs of those who cannot do so themselves.
Each role requires fiduciaries to act with integrity, impartiality, and due diligence to fulfill their obligations effectively. If you die without a will, the court will appoint an estate executor. The court can also appoint trustees or other fiduciaries if needed (see Utah Code § 75-7-704).
Regardless of their specific designation, key aspects of estate fiduciaries include the following:
- Conflict resolution
- Asset protection
- Financial management
- Record keeping
- Reporting (to the court)
Type of Fiduciary Duties
Fiduciaries owe a duty of care to beneficiaries, meaning they must make informed and careful decisions when managing the assets and interests they oversee. This duty ensures that fiduciaries act diligently, using their skills and expertise to the benefit of the estate or individual they are serving.
Other fiduciary duties include:
- Duty of loyalty: Fiduciaries must prioritize the interests of beneficiaries above their own. This duty prohibits any conflicts of interest or self-dealing, ensuring that fiduciaries act solely with the beneficiaries' welfare in mind.
- Duty of disclosure: This duty mandates fiduciaries to keep beneficiaries informed about significant matters affecting their interests.
- Duty of good faith: Fiduciaries are required to act honestly and sincerely when fulfilling their responsibilities.
- Duty of confidentiality: Fiduciaries must safeguard sensitive information related to the estate and its beneficiaries.
- Duty of prudence: Fiduciaries are expected to exercise sound judgment and cautiousness when making decisions.
How to Choose a Fiduciary: Selection Criteria
When choosing an executor for your estate or other estate fiduciaries, consider the following:
- Assess their expertise and skillset. Ask yourself whether they can handle the financial and legal responsibilities associated with the role.
- Be aware of any potential conflicts of interest. Appointing someone who is also a beneficiary can potentially lead to issues with the duty of loyalty.
- Consider relational concerns. Will the appointed party be in a difficult situation when it comes to family and beneficiary dynamics? Their ability to make impartial decisions and act out their duties may be impacted by relational dynamics.
- Check their availability. Does the named party have the time to dedicate to the role’s responsibilities? Confirm whether the fiduciary’s personal and professional life allow them to have the capacity for the role.
- Determine their trustworthiness. You want to choose someone with a proven track record of integrity and sound judgment, as fiduciaries are entrusted with significant power over the estate. While there are legal avenues that allow people to sue for breaches in fiduciary duties, it is best that you believe in the selected party’s honor.
- Confirm their ability to make tough calls. Do they have the ability to say no or push back against aggressive or insistent individuals? The fiduciary must be willing and able to make difficult decisions, such as denying beneficiary requests or taking action against debt collectors, in the best interest of the estate.
- Make sure there is a value alignment. If appointing a guardian or agent to manage the estate for minors, ensure their values and decision-making align with your own wishes for the beneficiaries.
- Remember that professional fiduciary services are offered. While professional fiduciary services offered by lawyers, banks, or companies can provide expertise, consider the additional costs and whether a personal connection is more important.
- Ensure they can handle disputes appropriately. The fiduciary should have the temperament and skills to navigate any conflicts or disputes that may arise regarding the estate in a measured, logical manner.
It is important to note that you are not locked into this determination and can update fiduciary designations. For instance, you may name your spouse as a potential estate executor; however, if you get divorced, you will likely want to appoint someone else, and you can.
Importance of Naming a Successor Fiduciary
A successor fiduciary steps in to assume responsibilities if the primary fiduciary is unable, unwilling, or unavailable to fulfill their duties. Having the foresight to name a successor can help safeguard the estate's operations, minimize disruptions and delays, and provide you with more peace of mind should there be a vacancy in fiduciary roles. When appointing a successor, you can consider the same criteria and information as with the primary appointed fiduciary.
Experienced Counsel for Estate Planning & Probate Matters
The attorneys at Nelson, Taylor & Associates, PLLC have been helping clients with their estate planning needs for decades. Should you need help with estate administration or the probate process, our firm offers clients one-on-one counsel and is known for our commitment to transparency.
Contact us online or via phone at (801) 901-7046 to discuss your case with a member of our team.
