What You Need to Know About Fiduciary Administration
Time and time again, it is stressed that proper fiduciary administration is important in drafting trusts or will because without it, there will be failure or negligence to carry out the utmost duty to abide by the dying wish of the decedent or act according to the best interest of the principal. Such duty to carry out the fiduciary administration is designated upon the executor in case of wills; and the successor trustee in case of trusts.
In order to know the legal and the ethical dynamics involved in a fiduciary administration, it is important to know the following:
What are the different types of fiduciaries?
- Personal Representatives: They are usually court appointed who may include liquidators or those that administer and settle the estate. They are only vested with limited role to act according to the best interest of the estate.
- Trustees: They are the ones administering the trust in good faith that is in accordance with the trust purposes and interest of the beneficiaries. They have ongoing responsibilities in contrast with that of the personal representatives.
- Attorneys-in-Fact and other agents: They are persons who are authorized to act in behalf of another person; they are not necessarily authorized to practice law.
- Guardians/conservators: They are persons who are responsible for the decisions about living arrangements and care provisions of the ward.
If the deceased has left a will, it will undergo probate. Once it is accepted as valid, such person named by the deceased to act for his behalf in his will will be designated as the executor (for male) or executrix (for female). The personal representatives of the decedent’s estate, in this case, is the executor/executrix.
In the absence of a will, the deceased was not able to designate his own executor or executrix. But this does not mean that there will be no personal representatives in an intestate proceeding. In this case, it is the court, having jurisdiction on such estate, who will decide as to who will be appointed personal representative. The one who will be appointed is called an administrator. In California, jurisdiction over the estate may be acquired by the domicile of the decedent or the existence of the estate assets in the state.
Ideally, a probate proceeding should be avoided when it comes to the administration of an estate because it can be expensive and lengthy. In effect, there is no need for a personal representative- especially if there is a living trust that has been fully funded. In this case, a trustee is being appointed by the one who created the living trust or the trustmaker. This is somewhat similar to a person writing a will who appoints or designates a personal representative to manage his estate.
In a revocable living trust, the trustmaker, trustee, and the beneficiary are usually one and the same person. However, there are one or more successor trustees that are being named in a trust just in case the trustmaker dies or becomes incapacitated. Most people would prefer a revocable trust over a will because the former protects the estate from public consumption.
Indeed, estate administration can be quite complicated on the part of the fiduciary because it is undeniable that fiduciary work can be time-consuming and difficult. You have to manage the assets of the estate, handle expenses and debts, funding bequests, closing estates, and deal with taxes and fees. It is of this reason that one would be properly guided all throughout administering the estate. Only the professional skills of a trust and estate administration lawyer from Carl Dimeff Law Office will help you address complicated legal issues in matters relating to fiduciary administration.