What Is a Fiduciary?

Estate Fiduciary

Estate planning is a necessary task if you want to leave assets to the family and friends of your choosing after you pass. To prepare the best estate plan for your unique financial situation, it is important that you are working with a true fiduciary, so you know that they are protecting your assets and not just working for their own income.

A fiduciary is a person or institution that is given power to act on your behalf, providing the highest standard of care with honesty and loyalty. In fact, they are legally obligated to be trustworthy in everything they do for you. A common fiduciary role is within the financial industry such as wealth management. You can find fiduciaries in other disciplines you may need to employ as well, including your attorney, accountant, real estate agent, and business adviser.

Planning Your Estate

When you’re planning your estate and setting up a will or living trust, each document requires you to name an executor or trustee/successor trustee for when you pass away, or in the case of a trust, if you are no longer able to make sound decisions.

While you can name a family member or friend for this role, the average person may not want to take on this responsibility as it can entail a lot, especially if you have complex assets and investments. So, some people opt to have a neutral third party take on these responsibilities. This is when you want to be absolutely sure that the person you hire is a true fiduciary so you can have some peace of mind that your estate is left in good hands and your wishes are followed. Keep in mind that you can also name multiple people for this role if you think that will be more beneficial.

You can be your trust’s own trustee while you are alive, but this fiduciary becomes responsible for all the assets you leave in the trust and how they are distributed to your beneficiaries. This person or business is required to act in your heirs’ best interest the entire time the trust is active.

Guardian and Health Care

If you have minor children, you will want to name a fiduciary to take care of them if you pass away. Many people choose their spouse to play this role for all aspects of their estate. In the case of more complex estates, you might designate various individuals or businesses to maintain certain parts of your assets and investments. For example, health care is another aspect which you will want to choose the right person in case you become incapacitated.

Lawyers, with their training and code of ethics, are one of the most commonly designated fiduciaries for estates as they must follow stringent laws and always put your best interests first. Speak with an experienced estate planning lawyer in Sacramento, CA to help determine what kinds of fiduciaries your estate might need.

Thanks to Yee Law Group for their insight into estate planning and fiduciary.