What is a fiduciary?
A fiduciary is a person or organization that is legally bound to act in the best interest of another party, managing their assets or affairs.
What are fiduciary services?
Fiduciary services involve the management and administration of assets on behalf of someone else, ensuring that they are handled with the utmost care and in accordance with the client's best interests.
How do fiduciaries differ from financial advisors?
While financial advisors provide guidance on investment decisions, fiduciaries have a legal obligation to act in the client's best interest and manage assets accordingly.
What are common examples of fiduciary relationships? Common examples include trustees managing trust assets, attorneys handling client funds, and financial institutions overseeing retirement accounts.
What legal obligations do fiduciaries have? Fiduciaries are obligated to act with loyalty, prudence, and in the best interest of their clients. They must avoid conflicts of interest and fully disclose any potential conflicts.
How are fiduciary fees structured? Fees for fiduciary services can vary and may be based on a percentage of assets under management, hourly rates, the court's schedule or a flat fee. It's important for clients to understand the fee structure before engaging fiduciary services.
What is the role of a corporate fiduciary? Corporate fiduciaries, often banks or trust companies, provide fiduciary services on a institutional level. In general, working with a corporate fiduciary may or may not be a good personal fit for your situation. You often will reach a different person each time and typically, you will not receive the personal attention that you seek from a private professional fiduciary.
How is the selection of a fiduciary made? Choosing a fiduciary involves considering factors such as reputation, experience, fees, and the specific services offered. Clients should thoroughly research and may seek referrals.
What happens in the event of a fiduciary breach? If a fiduciary breaches their duty, legal action may be taken. This could involve financial restitution and potential removal of the fiduciary from their role.
Do I need a fiduciary? Yes, you do! The need for a fiduciary depends on individual circumstances, such as the complexity of your financial situation and the level of trust and expertise required. You want an individual that is knowledgeable in both legal and financial matters and that can complete the task at hand. It's advisable to consult with a financial advisor or attorney to determine if fiduciary services are appropriate for your needs.
Licensed Professional Fiduciaries (LPFs) play a crucial role in managing the financial and personal affairs of individuals who may be unable to do so themselves. Here are some key responsibilities and activities that LPFs typically engage in:
Asset Management: LPFs manage and oversee the financial assets of their clients. This includes making investment decisions, monitoring portfolios, and ensuring that financial resources are used wisely and in the best interest of the client.
Estate Planning: Licensed Estate Planning Attorneys assist clients in developing and preparing estate plans. This involves tasks such as creating wills, trusts, and other legal documents to ensure the orderly distribution of assets according to the client's wishes. LPF's do not prepare estate plans for clients. Their goal is to fulfill the terms of these legal instruments.
Trust Administration: LPFs are responsible for the administration of trusts. They ensure that trust assets are appropriately managed and distributed in accordance with the terms specified in the trust agreement.
Conservatorship/Guardianship: LPFs may be appointed by the court as conservators or guardians for individuals who are unable to manage their personal and financial affairs due to incapacity. In this role, LPFs make decisions on behalf of their clients, always prioritizing the client's best interests.
Risk Management: LPFs assess and manage financial risks for their clients. This involves making informed decisions to protect and grow assets while considering the client's risk tolerance and financial goals.
Record-Keeping and Reporting: LPFs maintain detailed records of financial transactions, investments, and other relevant information. They provide regular reports to clients, beneficiaries, and, if required, to the court.
Beneficiary Advocacy: LPFs act as advocates for beneficiaries, ensuring that their rights and interests are protected. This may involve addressing disputes, communicating with family members, and ensuring that beneficiaries receive their entitled benefits.
Special Needs Trust Management: LPFs may specialize in managing trusts designed to provide for individuals with special needs. This involves balancing the financial needs of the individual with the preservation of eligibility for government benefits.
Coordination of Professional Services: LPFs often collaborate with other professionals, such as attorneys, accountants, and healthcare providers, to ensure comprehensive care for their clients. This interdisciplinary approach helps address various aspects of a client's life.
Compliance with Laws and Regulations: LPFs must stay informed about and comply with relevant laws and regulations governing fiduciary responsibilities. This includes adhering to ethical standards and legal requirements in managing client affairs.
In essence, LPFs act as stewards of their clients' well-being, providing financial stability, protection, and peace of mind through meticulous and ethical management of their affairs.