When you are making arrangements to ensure financial security for yourself and for your family, you might happen across the idea of naming a fiduciary.
A fiduciary can ensure that your money and assets are handled appropriately if you get sick, become injured or die. Knowing what a fiduciary does, the standards by which they are bound and the people or institutions you can entrust with these responsibilities will help you to appoint one who will fulfill the role appropriately.
What is a fiduciary?
According to Investopedia, a fiduciary is an individual or organization who acts on your behalf to manage your assets. Common examples would be the trustee of a trust, a guardian of property, an executor or a principal.
The Cornell Law Dictionary specifies that fiduciary duty is the “highest standard of care,” and that someone entrusted with these duties should act in your best interests, only making decisions that work best in your favor. As such, a fiduciary should disclose any and all potential conflicts of interest.
The duties of a fiduciary should not be taken lightly: The Consumer Financial Protection Bureau suggests that anyone acting under fiduciary duty maintains thorough and complete records of every financial transaction. It is also imperative that a fiduciary keep their money separate from that of the beneficiary; mixing money can result in financial and legal trouble.
Who can be a fiduciary?
According to the CFPB, you can entrust a friend or family member to act as your fiduciary by granting them power of attorney. This would allow them to manage your money, property and assets if you get sick or become unable to care for yourself. Duties of this nature would also include paying bills or debt, collecting rent from tenants, managing bank accounts and insurance and ensuring that you have the necessities you require.
If you are looking to leave assets or assign legal guardians for your minor children after your death, The Balance’s Julie Garber notes that a fiduciary can be designated in your last will and testament to ensure that your family’s needs are taken care of.
In cases where a spouse or an adult child would be in a position to manage your assets, Garber recommends naming that same individual as your fiduciary in all estate planning.
In cases where you prefer a neutral party, you may wish to contact a professional or institution specializing in specific areas.
Among those you can appoint to the role of a fiduciary are your attorney, real estate agent or agency, business advisers, financial advisers, mortgage brokers, accountants and bankers.
A trusted resource for your assets and property
Having trusted fiduciaries is essential for the just management and distribution of your assets and property in the event of illness or death. Consider your needs and the options available to you, speak with your family to reach a consensus on what is most important and seek out those whom you trust to act in your best interests.
The portfolio managers and trust administrators with Minster Bank’s Private Wealth Management Team are available to help you with all of your wealth planning needs. Contact an advisor to learn more.
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