How to Choose a Good Fiduciary
A fiduciary is a person who manages assets for the benefit of another person. This is a broad definition. Examples of a fiduciary include: an executor or administrator of a will; a trustee; guardian/conservator; agent under a power of attorney.
The commonality of these appointed positions is that the fiduciary acts in the interest of another person and not for themselves. An agent under a power of attorney or a trustee appointed under a trust has a fiduciary duty to act not for themselves but for the principal under the power of attorney or the beneficiary under a trust.
So what are the legal qualifications for such a person? The simple rule is that the person must be an adult. Generally, residency in Virginia is not a requirement. But obviously just being an adult is not sufficient.
When advising clients about who they should appoint I like to point to three qualities: competency; loyalty and availability. All three qualities are important.
Competency doesn't mean professional. Rather, a competent fiduciary knows what he or she can competently do and when they need expert help. Being able to spot and act on issues is important.
Loyalty means trustworthiness. A fiduciary must act for the benefit of the beneficiary, and not for themselves. If they do act for themselves, they are in breach of their fiduciary duty. The fiduciary can be fired and also sued. But you never want to reach that point. You should think about what possible conflicts a person may have in being your fiduciary.
By availability we man just that. Even if the prospective fiduciary is competent and trustworthy, if he or she is not in a position to act when needed then the appointment is for nothing. You should discuss with the prospective fiduciary as to whether or not they are willing to accept the appointment.
A corporate fiduciary is possible. There are corporate trustees such as bank trust companies and sometimes attorneys will serve as fiduciaries. In such cases the further issue of cost should be discussed and agreed upon.
Being a fiduciary is not an 'honorific' position. It requires time and work. Thinking about the qualities of competency, loyalty and availability is a good way to begin the selection process.
Edward Zetlin Law is experienced in such issues. Don't hesitate to call if you face such an issue or if you have additional questions. Edward Zetlin Law would be happy to discuss. Please contact us at 703-379-0442 or e-mail at firstname.lastname@example.org.
Community Presentations in April for Ed Zetlin
St Coletta of Greater Washington, 1901 Independence Ave SE, Washington, DC 20003 this April 30th at Noon. He will discuss Guardianship and special needs planning.