Professional Fiduciaries and Estate Planning

A private professional fiduciary (a licensed and bonded representative) can play a necessary and key representative role in administering a person’s estate plan. They can assist in a wide variety of ways, including the following: To settle a deceased person’s trust or probate estate; to administer a special needs trust; to administer a support trust; to administer a disabled person’s household finances; to make personal care decisions and arrangements as an agent for a disabled person; and to advocate, as a representative, for a disabled person’s government benefits.

When there is neither a suitable family member nor a close trusted friend to act in a representative capacity (e.g., as a successor trustee or as an agent under a power of attorney or health care directive), then nominating a professional fiduciary merits consideration.

Also a private fiduciary can be nominated as a back-up alternative trustee or agent, behind one or more family members. Having an alternative may mean avoiding otherwise unnecessary court proceedings, including even a conservatorship, when the time arises for administration.

Even when there are family or friends who would be willing to serve, difficult or complex situations may make a professional fiduciary better suited to serve. In a family where conflict amongst the children is expected over the administration of a parents’ estate, having a neutral private fiduciary instead of one of the conflicted family members may alleviate and facilitate the proper and more amicable administration of the estate.

Another reason why professional fiduciaries are desirable is the fact that they are professionals. In California, the Department of Consumer Affairs – Professional Fiduciaries Bureau (“PFD”), overseas the licensing and, where necessary, disciplining of professional fiduciaries. To become licensed, a fiduciary must pass an examination, meet thirty hours of approved education courses, have experience (or training) relevant to being a fiduciary, such as working as a bank or trust company officer, attorney, accountant and social worker. In addition, professional fiduciaries must pass a background check and be bonded.

A fiduciary’s bond is an important additional assurance to whomever the fiduciary serves. A bond pays, up to its coverage limits, for damages caused by the negligence or misconduct of a fiduciary. For example, if private fiduciary were to embezzle (steal) money, then the persons directly harmed by the embezzlement would be able to claim against the bond. Unfortunately, this does happen from time to time.

Professional fiduciaries vary significantly in their skills and competencies. When selecting a professional fiduciary due diligence is needed. That is, check the PFB’s website both to verify the fiduciary is licensed and to see if their record shows any disciplinary action; ask the fiduciary for references; go to the Professional Fiduciary Association of California (www.pfac.org) for a directory of member fiduciaries doing business in your location; and do a search on google using the fiduciary’s name to read any reviews that exist online.

A private fiduciary is typically compensated on an hourly basis, which varies mostly based on the fiduciary’s experience and geographic location. The cost is an important factor in deciding whether to hire a private fiduciary. Of course, there is also a cost with not having a trust, estate or personal care needs properly administered.

The foregoing discussion is neither exhaustive nor legal advice regarding how to proceed when considering a professional fiduciary. Discuss the possible benefits, risks and expenses associated with having a professional fiduciary with your estate planning attorney.

Dennis A. Fordham, attorney, is a State Bar-Certified Specialist in estate planning, probate and trust law. His office is at 870 S. Main St., Lakeport, Calif. He can be reached at Dennis@DennisFordhamLaw.com and 707-263-3235.