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What You Need to Know About Fiduciary Duties and Estate Planning

Fiduciary Duties and Estate Planning in California

If you’re planning for your estate or you are a beneficiary of an inheritance, the best place to start is to do your research and consult with an estate planning attorney.

When unsure of what to do, you can ask professionals for advice on investing and financial management, you can also get help from an estate planning lawyer in Orange County to plan how your estate will be inherited by the beneficiaries you chose, or to understand how you should go about succeeding or inheriting estates left to your name.

When you ask professionals for advice, you are assuming that they would help you given their professional duty. Hence it will be incredibly difficult if the people advising you are not trustworthy, or have conflicting interests preventing them from helping you achieve what is best for you.

In such instances, it is of utmost importance to be aware of who fiduciaries are and what their duties are to you with regards to estate planning so that you are aware should any of them not fulfill what they are legally obligated to do.

What is a fiduciary?

A fiduciary is an individual or an institution who is legally or ethically bound to represent you while upholding your best interests.

Fiduciaries are often highly educated professionals or institutions in specialized fields such as insurance, real estate, and law.

These fiduciaries serve people on the basis of good faith and trust and they advise people to help them make the best decisions possible in their situations. Often, fiduciaries are responsible for protecting your properties and finances though, at times, they can be entrusted to care for people, such as underaged children left behind by the deceased.

Do note that not all professionals involved in helping people with their estates and finances are fiduciaries. If you want to make sure you’re working with a fiduciary, talk to an Orange County estate planning lawyer.

What are Fiduciary Duties?

A fiduciary’s professional obligation to serve people in good faith is called his or her fiduciary duty. Professionals who counsel people in terms of money, investments, succession, and estate planning are legally and ethically bound by their fiduciary duties — helping people make decisions that will be in their best interest.

They are dictated by the law to be impartial and balance the conflicting interests of different beneficiaries, and they also should not, under any circumstance, prioritize their interests or that of any party.

Who are possible fiduciaries who can help you with estate planning?

When it comes to estate planning, fiduciaries are usually involved in every step of the process. From the moment a person started amassing their estate, making investments and buying properties and planning about succession — up to the moment when you die and your estate undergoes probate or your trust is administered.

It is the fiduciary’s job to help you make the best financial and succession decisions and to make sure that your estate is managed well, that liabilities are settled, and that assets are distributed according to your will or intestate laws.

While alive, fiduciaries in estate planning can be real estate agents, lawyers, investment firms, or financial advisors. However, when you die, fiduciaries are often lawyers, or in probate situations, fiduciaries can also be whoever the court assigns as trustee or executor of the deceased’s will.

In certain cases where a will appoints a representative, the representative will be the fiduciary. 

What Fiduciary Duties are relevant in your estate planning?

While you’re alive, fiduciary duties are involved whenever you make decisions that affect your estate.

For a fee, fiduciaries are legally bound to be honest and retain your trust with regards to helping you manage your assets so that you minimize costs, avoid outstanding liabilities, maximize possible returns on your investments, and protect your properties.

This involves financial or legal advice when you are availing insurance, purchasing or selling stocks, properties, or real estate, and when you are allocating funds, putting up trusts, or retirement funds.

Meanwhile, the role of the fiduciary after your death will be to carefully administer your estate by collecting all your assets, being timely and responsible with paying taxes, filing tax returns, paying off all liabilities applicable to your estate, and making sure that your will directs the probate.

Furthermore, they ensure your trust is administered according to the conditions you set. 

What to do when fiduciary duties are unfulfilled?

Fiduciary duties are unfulfilled if a fiduciary fails to exercise due care, skill, and diligence or acts to enrich himself or herself at the expense of the client or beneficiaries.

If you’ve identified that a fiduciary failed to perform in your best interest and misrepresented you in any way, you are entitled to take legal action against the said fiduciary.

You can either try to resolve the matter between you and the fiduciary, or you can file a civil lawsuit against the fiduciary. If the said fiduciary is a lawyer, bound by the code of ethics and professional conduct, then a proven violation of fiduciary duties can lead to possible disbarment and other consequences.

If the fiduciary is a trustee or representative who mismanages the estate at the expense of the beneficiary, the latter can file a civil lawsuit and have the representative or trustee replaced and have the losses in the estate be compensated by assets owned by the representative.

In these cases, fiduciaries are allowed to defend themselves against any accused breach, and in the event of a financial loss under their watch, they are usually protected by the business judgment rules.

It states that fiduciaries holding financial roles are not to be held liable in situations where financial loss is incurred given they were exercising their due diligence. 

Find a Trustworthy and Reliable Estate Planning Attorney in Orange County

If you think fiduciary duties due to you are not fulfilled, you should consult our Orange Country estate planning attorney to help you examine the situation and determine your best course of action given your circumstances.

For a consultation, contact us today at McKenzie Legal & Financial today.

Thomas McKenzie Law
Estate Planning Attorney in California. Full-service law firm specializing in estate plans, wills and trusts, long-term care, and financial consulting. Thomas L. McKenzie received his Juris Doctor degree from Western State University College of Law, in Fullerton, California. While working full-time at night and attending full-time daily classes, Tom graduated law school with honors in 1993.

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