In this week’s blog post on understanding estate planning, we will direct our attention to the concept of a fiduciary. You may not be familiar with the term. A fiduciary is a person or organization that plays a key role in your estate plan. Most estate plans rely on multiple fiduciaries, each with specific duties, responsibilities, and abilities, to help protect your interests and your estate. Let’s take a look at some common questions about fiduciaries, their jobs, and why they matter.
What is a Fiduciary?
We commonly interact with people in many different ways. As we go about our day-to-day tasks, the law requires us to act responsibly. As long as we act as a reasonable and prudent person, we generally will not be liable for accidental harm that might arise from our actions. In other words, as long as we refrain from acting negligently or criminally, we are legally “safe.”
Sometimes, people seek advice or assistance from others. The law recognizes that these situations are different than the average interactions we have with others in our daily lives. When we seek help from certain people, the law imposes heightened duties on those who help us. We call this a fiduciary duty.
A fiduciary is someone who has a heightened legal obligation to act in our best interests. In this instance, we are referred to as the principal, while the fiduciary is often referred to as the agent. When a fiduciary acts on behalf of the principal, the fiduciary has a legal obligation to keep the principal’s best interests at heart.
Who Are Your Fiduciaries?
You cannot accidentally become a fiduciary. When you hire an attorney, or an attorney agrees to work for you, your attorney becomes a fiduciary. Your attorney has a legal responsibility to do what is in your best interest, and cannot use the relationship to further the attorney’s own interests at the expense of yours.
In the estate planning sense, there are many people who will act as your fiduciary. When you write a last will and testament and name your personal representative or executor, that person becomes a fiduciary. Should you create a trust, the trustee you appoint takes on fiduciary responsibility when managing the trust assets.
There are many other situations in which a fiduciary relationship will exist in an estate plan. If you’d like more information, please feel free to contact us so we can discuss the issue in more detail.
For additional information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about fiduciaries and the roles they play in your estate planning, contact an experienced Parman & Easterday attorney by calling 405-843-6100 or 913-385-9400 to schedule your appointment today.