You Are the Fiduciary, Now What?

You have been appointed as the executor of a Will or as the Trustee of the Trust. You are now a “fiduciary” because you act for the benefit of another. Trustees, executors, and personal representatives are all fiduciaries. What are the dos and don’ts for your new job?

A. Fiduciary Dos

1. Do be sure you understand terms of the Will or Trust and the needs of the beneficiaries, both present and future.

2. Do provide a statement to all beneficiaries as required by the law.

3. Do act impartially toward all classes of beneficiaries. You cannot favor the income beneficiary, who wishes a high current return, at the expense of the remainder beneficiaries, who may prefer growth, or vice versa. You are expected to deal fairly with all beneficiaries.

4. Do act with the utmost honesty at all times, and document major decisions and actions.

5. Do exercise reasonable care and skill when administering the estate or trust and retain professionals, including attorneys, investment managers, and tax return preparers. Remember, others may be relying on you for their financial security and quality of life.

6. Do make assets productive at all times, including checking account assets.

7. Do read and understand your California investment rules for fiduciaries.

B. Fiduciary Don’ts

1. Don’t act to benefit yourself, or in a way that might place you in an apparent or real conflict of interest.

2. Don’t commingle estate or trust assets with your own assets.

3. Don’t make investment decisions without a professional’s assistance. Poor investment management can result in losses to the estate or trust and may subject you to personal liability.

Call Attorney W. Bailey Smith at (949) 833-8891for a consultation in either his Irvine or Long Beach office. Learn more at “yourtrustdr.com.”

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