What is a fiduciary?
A fiduciary is someone who has the legal responsibility to act in another person’s best interests. In elder law, this could mean serving as a trustee, executor, guardian, or agent under a power of attorney. A professional fiduciary is a neutral third party (often an attorney, accountant, trust company, or licensed professional) who takes on this role for a fee.

There are both pros and cons to using a professional fiduciary. Some of the “pros” include:

• Neutrality: They can reduce family conflict by making decisions without favoritism.
• Expertise: Professionals are familiar with complex rules around retirement accounts, trusts, Medicaid, and tax reporting.
• Consistency: They’re available long-term, even when family members move away or pass on.
• Accountability: Fiduciaries are held to high standards of conduct and can be legally liable if they misuse funds.

On the other hand, there are a couple of downsides to using a professional fiduciary. You should determine whether these outweigh the pros afforded by a professional fiduciary.

• Cost: Professional services come with fees, often charged hourly or as a percentage of assets.
• Less personal connection: Unlike a family member, they may not know your values, quirks, or family history.
• Availability varies: Not every community has a deep pool of licensed or qualified professionals.

When might you need one?

There are a handful of different reasons you might consider using a professional fiduciary. For example, if you don’t have close family or friends you trust with financial or medical decisions. Or, if you anticipate high family conflict (for example, siblings who don’t see eye-to-eye). Some people choose to simply relieve their children or other loved ones of the burden of administering their estate. You may also wish to use a professional if your estate is particularly complex or involves ongoing business or real estate management.

Where to find a professional fiduciary:
Start with referrals from your estate planning attorney, CPA, or financial advisor. Many states also have professional fiduciary associations or licensing boards that maintain directories. Trust companies and banks sometimes provide fiduciary services as well, especially for ongoing trust administration.

At the end of the day, appointing a professional fiduciary isn’t the right choice for everyone. But for families without clear decision-makers, or those who want to minimize conflict, it can be a wise way to ensure your wishes are carried out with skill and impartiality.

The post The Rise of Professional Fiduciaries – Why Families Sometimes Need Outside Help appeared first on Desert Law Group | Kimberly T. Lee.