Law Lingo: Fiduciary Responsibility
Welcome to Law Lingo: a monthly blog series brought to you by The Brown Law Firm, LLC that explains estate planning terminologies in simple terms. This month we will explain fiduciary responsibility.
If you are named a fiduciary, this means that you are responsible for managing the assets (money, property, legal matters, etc.) for someone else. In regard to estate planning, you may choose one or more fiduciaries to act in your best interests and help protect your assets and your family. There are many types of fiduciary roles that can be hand-picked by you and specifically named in your will:
- Executor: responsible for distributing your assets according to the wishes you’ve outlined in your will. This person will also tie up the loose ends of your estate such as alerting important parties of your passing, paying all debts (from the estate), filing taxes and more.
- Guardian: responsible for the health and welfare of your children if you become incapacitated, cannot provide proper care for your children while you are alive or after you pass away.
- Trustee: responsible for managing the assets in your trust while you are alive and after you pass. This may involve making investments, paying bills, filing taxes, distributing assets, etc.
- Medical Power of Attorney: responsible for making medical decisions on your behalf if you become incapacitated. This can include making end-of-life decisions for you or carrying out your predetermined wishes in these types of situations.
- Financial Power of Attorney: responsible for all types of financial duties on your behalf. This may include selling property, receiving payments from Social Security, making baking transactions, gifting money or assets to others, etc.
Because these individuals have direct access to your estate, there are certain fiduciary responsibilities they are expected to follow:
- Be completely honest about their credentials and experience
- Provide high-quality, ethical advice and care
- Not profit from the advice or care they provide
- Step aside if there are any conflicts of interest
- Keep detailed records of transactions
- Report their transactions to the beneficiaries, if required
Any breaches to these responsibilities can warrant legal action against the fiduciary. If you suspect this is occurring, it is best to hire an experienced, competent legal team to help you take action.
Still confused by fiduciary responsibility or any other legal terms? Wondering if you have the capacity to handle the fiduciary responsibilities? Interested in talking to a team of experts who have handled hundreds of these situations? The Denver estate planning lawyers at The Brown Law Firm, LLC are here to help. Even if you just want to ask questions about fiduciary responsibility in Colorado, contact us at (303) 339-3750 or send us a message online to meet with our experts.