Understanding Fiduciary Duties
Fiduciary duties are a key principle in estate planning, elder law, and asset protection planning. When you designate a fiduciary or are asked by a loved one to serve in a fiduciary capacity, it is essential to understand the nature of fiduciary duties imposed by Georgia law. Getting help from a knowledgeable attorney is the best way to make certain that you select fiduciaries who have the necessary qualifications and skills to fulfill their responsibilities.
What Are Fiduciary Duties?
Fiduciary duties are one of the highest levels of duty imposed by law. These special responsibilities arise when one person acts on behalf of another person. The law requires that the designated fiduciary act in the best interests of the principal, which generally includes the duties of care, loyalty, prudence, good faith, and confidentiality. A designated fiduciary has duties directly related to the responsibility assigned to the by the principal.
In your estate plan, you designate several different fiduciaries, including:
- The executor of your estate, who has priority to seek court appointment to serve as the personal representative to administer and distribute your estate
- Your agent under a durable financial power of attorney, who manages your finances if you become incapacitated
- Your agent under an advance directive for health care, who makes your medical and health decisions if you become incapacitated
- A trustee appointed to manage and administer a trust
Each of these fiduciaries has specific legal responsibilities closely related to the duties assigned to them. When you select the individuals to serve in these capacities, you should choose people who have the ability to perform the responsibilities assigned to them.
It is also important to make certain that the individuals you choose are aware of their selection and are confident that they can fulfill the fiduciary duties associated with the designation. A breach of fiduciary duty is an extremely serious legal matter. A fiduciary may be personally liable to you or your beneficiaries for harm and damages caused by the violation of fiduciary duty.
Selection of Fiduciaries
The selection of each fiduciary in your estate plan requires careful consideration of the responsibilities of the position and the capabilities of the person you designate. An experienced estate planning attorney helps you understand the fiduciary duties of each position and evaluate the qualifications of the individuals you consider. This matter is one of the critical reasons that you should never attempt to create an estate plan without assistance from a knowledgeable lawyer.
For example, when you choose an agent to make your medical and health care decisions if you become incapacitated, it is essential to select a person who knows you well and fully understands your health situation. That person should also be someone who will be readily available and willing to step in if an emergency occurs and significant medical decisions are necessary. The person you choose should be someone you trust to make the right decisions on difficult issues, including in a high-pressure situation.
The executor of your estate has responsibilities that relate to administration and distribution of your property after they apply for appointment as the personal representative of the estate. Following court appointment, the executor is responsible for everything from collecting and protecting assets, valuing the property in the estate, completing probate when required, to ultimately distributing the assets to your beneficiaries. While a personal representative usually should retain a probate attorney to help with the process, the executor you select should be a person who is capable of navigating the process and making important decisions that affect your beneficiaries.
The person who serves as agent under your durable financial power of attorney must be able to manage your finances in the event of incapacity. The individual should be a person you trust to handle your money and financial accounts. They must be attentive to your financial needs and be able to review and pay bills, as well as manage the accounts. Experience in financial matters is an essential qualification.
If you have a trust, designating a trustee with the ability to manage and distribute the trust assets is crucial. Depending on the nature of the trust, the trustee may make investment decisions as part of managing the trust, in addition to making decisions concerning distributions to beneficiaries. Your trustee should have the right level of financial ability to fulfill all the fiduciary duties assigned to them under the terms of your trust.
Given the wide range of fiduciary duties that arise in an estate plan, and the different qualifications required for each position, counting on an experienced estate planning lawyer for help in selecting your fiduciaries is strongly recommended.
Talk With a Trusted Georgia Estate Planning Attorney
In our Cartersville estate planning practice at Asset Protection & Elder Law of Georgia, we assist clients with all aspects of creating and maintaining an estate plan, including selection of all fiduciaries designated in plan documents. We provide services to clients throughout the communities northwest of Atlanta, including in Bartow County, Cobb County, Cherokee County, Gordon County, Floyd County, and Paulding County. Call us at (770) 382-0984 or contact us through our online form.
