Virtually every estate plan in Arizona makes some use of a fiduciary. Some plans rely more heavily on such persons, but at the very least, every will admitted to probate requires a trustworthy person to gather assets and ensure that the decedent’s testamentary directions are followed. Understanding how different types of fiduciaries are supposed to function can help a person choose a proper nominee to serve as an executor or trustee or conservator or guardian.
The basic concept of fiduciary duty
The term “fiduciary” generally refers to a relationship in which one party establishes a trusting relationship with another. Perhaps the most common example is a person who is chosen to take possession of another person’s assets becomes a trustee. This trusting relationship exists in many areas of estate law.
Trustee
As noted, a trustee is the term given to a party who takes possession of another’s money or assets and is legally obligated to exercise a high degree of care in managing the assets according to the settlor’s instructions.
Guardian
A guardian is a person chosen by the probate court or by a parent to ensure that the basic needs of a disabled person or a minor are satisfied.
Conservator
A conservator is a fiduciary who is appointed to tend to the financial affairs of a person who is unable to do so.
Personal Representative
A personal representative is chosen to ensure that the directions expressed in a will are carried out faithfully. The term often includes a person appointed by the court to manage the assets in the estate of a person who left no will.
Power of attorney
Any person who has been given a power of attorney owes a fiduciary duty to the person who created and signed the power. Most powers of attorney contain explicit instructions to the person holding the power how and when to use the power.
Choosing a fiduciary
With all of the different functions that are fulfilled by fiduciaries, the most obvious qualification for such a role is honesty and trustworthiness. Close friends are often chosen, and many trust settlors use professional trustees, such as the trust department in a bank or a financial counselor. An experienced estate planning lawyer can offer helpful advice about how and whom to select as a fiduciary. Some law firms often provide fiduciary services themselves.