The confidential relationship between parties not necessarily attorneys.
A fiduciary is a person or an entity with power to act on behalf of another person or entity requiring trust, honesty and loyalty. Accountants, attorneys, bankers, business advisers, financial advisers, mortgage brokers and real estate agents are examples of common fiduciaries. These types of service providers are functioning in a capacity where your best interest is of paramount concern. They must ignore their personal motives and desires and make decisions that favor of your goals and well-being.
How Does a Fiduciary Work in Relation to Estate Planning?
Fiduciaries serve in a number of different roles during your life and after you pass. Here are some of the roles you will find fiduciaries working in:
Trustee, Co-Trustee, or Successor Trustee: This is the person who is responsible for managing assets you have in a trust. She or He must act in accordance with the trust agreement and all its provisions. Many people choose to serve as their own trustee only appointing successor trustees to take if they become incapacitated or upon their own death.
Health Care Surrogate Designee: Medical decisions are made by this person on your behalf for health care decisions. This fiduciary must use “substituted decision making” which means he/she must make decisions as if standing in your shoes not based at all on what they think is right or wrong. You may not use a business entity or a health care provider currently treating or serving you for this fiduciary role.
Agent, Attorney-In-Fact: As an attorney-in-fact a person is working as your Agent under a Durable Power of Attorney, for example. In granting the power to act you are the Principal. This person is responsible for managing your personal business under the requirements of Florida Statutes and the specific instructions in your DPOA documents. You may choose one or more persons or a trust company, a banker, an attorney, or accountant.
Personal Representative: This person is responsible for settling your estate in compliance with your last will and testament. One or more individuals and/or an institution, such as a bank or trust company, or an attorney (even your current attorney) may serve in this role.
Guardian: Such a role is established by you before you have a need for a guardian. Guardians become necessary when a person is determined to be incapacitated and there is no valid Agent to handle the incapacitated person’s business. A durable power of attorney often is enough to avoid guardianship. While guardianship is rarely the preferred route for care, due to costs, lack of privacy, and limits of court oversight, assigning a pre-need guardian keeps the court from having to make a decision as to who is best for appointment to this role.
Preneed Guardian: This is a fiduciary of your choice that can be responsible for your minor children should you die while your children are still minors. You can designate this person in your last will and testament or in a free standing document. The person you designate will only be called upon if there is no other natural guardian to care for your children. (I.e. if you are divorced a pre need guardian designation does not prevent your former spouse from having full custody of your child(ren) in Florida. It also does not provide for visitation with your family in the instance of your death. Seek out an experienced family law attorney for advice on this topic.
Some people choose to have the same person or entity serve as fiduciary in all their needed roles. Some married people assign their spouse in all capacities. Some clients choose a different person for each role either to spread the workload or to create a system of checks and balances. Your decision should be made after careful consideration and consultation with your attorney.
What happens if a Fiduciary Breaches their duty?
Above we have discussed different roles available for you to appoint a person or entity to a fiduciary position. The reality is that anytime you entrust another person to take action on your behalf you are creating a fiduciary relationship. It is not allowed for a fiduciary to ignore this trust while acting within their fiduciary role. Realtors can lose their license, lawyers can be disbarred, and other fiduciaries can be held liable (financially) for taking action not in your best interest.
An attorney is your greatest resource for information about estate planning and incapacity planning. Call today or use the Contact form above for an immediate appointment. Our attorneys are available by phone 24/7 to help you, 321-631-0506 – offices in Melbourne and Cocoa Village.