When a person gets sick and is unable to manage their finances, or when a child is too young to make decisions about a trust, someone else needs to step in to oversee their affairs. In some cases, family members help, but because of the complexity involved in managing the personal and financial affairs of others, people often seek the services of a professional.
That’s where a professional fiduciary comes in. Under California law, a professional fiduciary is licensed to provide important services to those who require assistance due to age, physical limitations, or other considerations that leave them unable to manage their affairs, such as day-to-day household upkeep, coordinating medical care, and managing finances.
Why Use a Professional Fiduciary?
Although family and friends can help manage the affairs of loved ones, a professional fiduciary can offer important neutrality that may not be possible to receive from others.
For example, if siblings try to manage their parents’ finances, family members may end up in conflict over issues such as fairness and how to put the parents’ needs first. Making decisions for family members and other loved ones can also be an emotional experience, which can increase the difficulty of choosing what’s best for the person in need. Or family members may live too far away to handle the day-to-day affairs of a loved one, and thus it becomes more convenient to use a professional fiduciary.
In addition to these benefits, professional fiduciaries also have the expertise needed to help others. From managing estates to paying taxes to coordinating health care, a lot goes into managing the affairs of others. Even if a family member has knowledge in one area of need, there’s a good chance that they do not have as much comprehensive experience and training as a fiduciary in handling the full spectrum of care for others.
What Are the Responsibilities of a Professional Fiduciary?
The scope of a professional fiduciary’s work can be broad, and it varies based on the needs of the person requiring care. A child who is not old enough to manage a trust, for example, may require limited services from a professional fiduciary, whereas an incapacitated person may require the full spectrum of services.
Specifically, the responsibilities of a professional fiduciary can include:
Estate management, e.g., overseeing the execution of a will
Trust management, e.g., acting as the trustee to carry out the terms of the trust
Power of attorney, e.g., making legal decisions on behalf of the person in need
Financial management, e.g., making investments
Tax management, e.g., filing and paying taxes
Health care coordination, e.g., employing caregivers and nurses
Household management, e.g., paying bills
Property management, e.g., hiring contractors
And these responsibilities are not necessarily all of the duties a professional fiduciary may carry out. The fiduciary can take on essentially any professional service they are capable of performing or coordinating as it relates to managing someone’s affairs.
Who Hires a Professional Fiduciary?
While family members can choose a professional fiduciary to manage affairs for a loved one, they must have this decision approved by a court to ensure the person in need of care receives a legitimate appointment. In situations where family members disagree about what to do in managing someone’s affairs, or if there’s no family available to make a decision, a court may decide to appoint a professional fiduciary.
However, individuals can also decide to appoint their own professional fiduciaries before they need care, such as by specifying the circumstances for such care in their estate planning documents. Doing so can help ensure that someone who needs care will receive services from the professional fiduciary of their choosing, and it can help avoid conflict among family members in deciding how to manage their affairs.
Help Protect Yourself or Loved Ones
By using a professional fiduciary for yourself or loved ones, you can help protect against the risk of someone mismanaging affairs, whether that’s due to malicious intent or negligence. Since a professional fiduciary is a regulated role that comes with an expertise in overseeing others’ affairs, you can be more comfortable knowing that you or a loved one will have an objective third party making important decisions about finances and overall care.
Discuss your situation with a California licensed professional fiduciary.