Welcome to Law Lingo: a monthly blog series brought to you by Brown & Crona, LLC that explains estate planning terminologies in simple terms. This month we will explain fiduciary duty.
In regard to estate planning, fiduciary duties can vary, based on the type of fiduciary role you have been assigned. For example, as an appointed fiduciary, you may be responsible for managing another person’s financial situation, legal matters, welfare of children, property, medical decisions, etc. Even though there are different fiduciary roles, the underlying obligations are a duty of care and a duty of loyalty.
If you are creating a will or trust, and you want to protect your assets and ensure that your family is well cared for after you pass away, designating one or more fiduciaries is a smart move. You will want the fiduciaries you choose to have certain traits:
Various Fiduciary Duties
It is important to plan ahead! Arrange for trusted individuals to handle your affairs before you become ill or are involved in a life-threatening situation. Here are a few situations to consider.
- Designate a person to settle your estate (pay bills/debts, file taxes, etc.) and distribute your assets to the people you designate as beneficiaries in your will. This person is called an executor and the duties would take effect after you pass away.
- Designate a person to care for your children in the event you pass away or become incapable of caringyou’re your children yourself due your own physical or mental illness. This person would is called a guardian and the duties could take effect after you pass away or while you are still living.
- Designate a person to manage the assets you have placed into a trust. This person is called a trustee, and the duties could be handled while you are still living or after you pass away. Duties can include making investments, paying bills, filing taxes, distributing assets, etc.
- Designate a person to make medical decisions for you in the event you are unable to share those wishes with your loved ones and/or your doctor. This person is called an agent under medical power of attorney and the duties would take effect while you are still living. It is important to note that this person might need to make difficult choices such as end-of-life decisions.
- Designate a person to make financial decisions for you in the event you are unable to handle your finances due to physical or mental incapacity. This person is called an agent under financial power of attorney and the duties would take effect while you are still living and terminated when you pass away. Duties might include selling property, processing payments from Social Security, making banking transactions, gifting money or assets to others, etc.
Still confused by fiduciary duty or any other legal terms? Are you trying to determine how to choose the right fiduciaries for your unique situation? The Denver estate planning lawyers at Brown & Crona, LLC can help you understand fiduciary duties so you can choose the right people to serve. Contact us at (303) 339-3750 or send us a message online to meet with our experts.