What is a Fiduciary?

A fiduciary is an individual or corporation legally entrusted with the responsibility to manage property for the benefit of another person, referred to as the principal. In the realm of estate and trust management, a fiduciary plays a crucial role in ensuring that the estate or trust is handled appropriately and in the best interest of the beneficiaries. Fiduciaries are assigned formal titles depending on their specific duties and the nature of their responsibilities. For example, a fiduciary might serve as a trustee of a trust, an administrator or executor of an estate for someone who has passed away, or a guardian appointed to manage the affairs of someone unable to do so themselves. Regardless of the title, each role involves acting in a fiduciary capacity and upholding the highest standards of loyalty and care for another person’s best interest.

Being selected or appointed as a fiduciary is an important responsibility that carries strict legal obligations. Fiduciaries are required to exercise loyalty, skill, and diligence in managing the property or estate under their care. If you need to select a fiduciary—whether it’s for managing your estate or overseeing a trust—it’s essential to choose someone who is not only trustworthy but also capable of fulfilling these responsibilities. The role of a fiduciary comes with significant legal and financial accountability, and the decision should not be taken lightly.

Selecting the Right Fiduciary

When choosing a fiduciary, it is important to consider the complexity of the estate or trust, as well as the specific duties the fiduciary will need to perform. In smaller or less complicated estates, a family member may be well-suited to act in this role. However, in more complex situations, such as those involving business interests, significant investments, or tax planning, a professional fiduciary may be a better choice. Additionally, if disputes are likely to arise among heirs or beneficiaries, a professional may be better equipped to handle such challenges impartially.

A fiduciary’s duties often include the administration, management, and distribution of property. To fulfill these responsibilities, the fiduciary must be able to:

• Locate, collect, and safeguard property.
• Determine and settle debts and creditor claims.
• Locate heirs and beneficiaries.
• Collect income, such as dividends and interest.
• Keep accurate and detailed records of the estate or trust.
• File any necessary tax returns and ensure the timely payment of taxes.
• Prepare final accountings and file required documents with the probate court.
• Distribute the estate or trust assets according to the legal guidelines.

The Fiduciary’s Duty of Care

A fiduciary is legally obligated to act with the same level of care that a prudent person would exercise under similar circumstances. This means that they must handle the estate or trust assets with competence and diligence, always prioritizing the best interests of the principal or beneficiaries. A breach of this duty of care can result in serious legal consequences, financial penalties, and damage to the fiduciary’s reputation. The legal ramifications of failing to uphold fiduciary duties can be severe, which is why it’s critical for fiduciaries to fully understand their responsibilities.

Whether you are selecting a fiduciary or have been appointed as one, it’s important to consult with an experienced attorney to ensure you understand the process and avoid costly mistakes. Proper legal guidance can help fiduciaries navigate complex tasks and fulfill their duties in accordance with the law.

Need Help with Fiduciary Responsibilities?

At Crosswhite Law, we understand the importance of choosing the right fiduciary and ensuring that fiduciary duties are carried out properly. Whether you need assistance in selecting a fiduciary for your estate or require guidance in fulfilling your fiduciary responsibilities, our experienced attorneys are here to help. We offer expert legal advice to trustees, executors, guardians, and anyone involved in fiduciary roles.
To schedule a confidential consultation with one of our estate planning attorneys, call our office at (704) 873-7233 or complete our online form.