Fiduciary Duty Seal With a PenEveryone eventually needs to think about appointing someone responsible to handle financial and legal matters after your time on this Earth is over. The duties of a fiduciary are extensive, but also crucial to ensuring your wishes are honored and your heirs are protected financially after you are gone. If a loved one trusts your financial judgement, as our Brooklyn asset protection attorney explains, you may even be put in this position yourself.

What Does Fiduciary Mean?

A fiduciary is simply an appointed agent, who can be a single individual like a family member or an organization such as a corporate trustee service. That agent serves as a personal representative who has both an ethical and legal duty to act in the best interest of the beneficiary, who is known as the principal.

If you have a fiduciary duty, then you are required by law to act in good faith and with a duty of loyalty towards the principal. In other words, you need to put that person’s interests over your own and not use their assets for your own personal enrichment.

In many cases, the fiduciary’s responsibility towards the principal is strictly financial in nature.  A fiduciary can be named in a number of circumstances dealing with either business matters, such as an investment advisor or corporate board member, or when handling a loved one’s estate after they pass away. You could potentially take up the role of fiduciary in:

  • Administration proceedings, when the fiduciary is known as the administrator
  • Probate after someone dies, and the fiduciary is instead referred to as the executor of the estate
  • Setting up a trust so a family member or other loved one is covered financially after the death of a parent, spouse, or caregiver. In this case, the fiduciary is known as the trustee.

The specific person acting as fiduciary during probate or estate administration is often a family member like a spouse or adult child, but that isn’t the only option. A friend or business acquaintance can also serve in this important role. In some cases, particularly involving larger estates with significant assets, an attorney may be named as fiduciary instead.

What Will I Need to Do as a Fiduciary?

The specific duties and requirements as fiduciary are often more complex than you expect, and there are a number of pitfalls involved that may cause you serious legal trouble. That’s why you should make a point to consult an experienced probate attorney if you’ve been named the executor and have a fiduciary duty towards the deceased.

Utilizing an attorney doesn’t just save yourself potential legal headaches, but it also helps ensure you correctly follow the wishes of your loved one. In many cases, funds from the estate can even be used to pay attorney’s fees, which can cost you more in the long run if you don’t consult an estate planning lawyer.

In the specific case of probate after someone dies, your role as fiduciary requires acting on behalf of the deceased to:

  • Appraise and document assets like real estate, bank accounts, family heirlooms, vehicles, and so on
  • Disperse assets from the estate to heirs according to the instructions set down in a will, letter of instruction, or other documents 
  • Handle outstanding debts still owed to creditors
  • Maintain records of investments and assets, as well as handling issues like interest or dividends from various accounts
  • Provide the will to a probate court

Whether you have been named the executor of an estate, or you are planning for the future and need to choose a fiduciary to oversee your own probate process, you absolutely need to contact an attorney. Besides walking you through the fiduciary requirements, an attorney can also assist in other related concerns, such as placing assets in trusts to avoid the need for drawn-out probate procedures in the first place.

Ted Alatsas
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Trusted Brooklyn, New York Family Law Attorney helping NY residents with Elder Law and Asset Protection