What is the role of a Professional Fiduciary in the context of California probate law? And just what is a Professional Fiduciary?
Let's first define Professional Fiduciary, as it's not a profession that is particularly well known. A professional fiduciary has two primary roles within probate law. The first is as someone whose job is to manage the estate of a deceased person. The second role is as someone who manages the care of a living person who cannot manage their own care.
Most often this is due to dementia or Alzheimer’s. When managing the estate of deceased person, professional fiduciaries are sometimes also called a Professional Trustee or Professional Estate Administrator. When managing the care of a living person, they are usually acting as a professional Conservator or Agent (under Durable Power of Attorney).
What is a Fiduciary's Role in Trust, Estate, and Probate Law?
These professional fiduciaries are an important part of the Trust and Estate Ecosystem. As an Estate Attorney in the San Francisco East Bay who regularly handles estate planning and trust/estate litigation, fiduciaries typically come up in two different ways.
1. The Estate Plan
The first is when someone comes to me and says he or she wants to put an estate plan together, but does not have local family or family/friends they can trust with to handle their estate and/or healthcare. In this case, I recommend they meet with several different professional fiduciaries in the area. Then, if they feel comfortable, they might choose to put that person into their estate plan.
If the fiduciary is named as the backup trustee, when the person creating the estate plan dies, the professional trustee will step in to manage the distribution in an orderly and diligent manner.
If chosen as an agent under an Advance Healthcare Directive or Power of Attorney, the fiduciary would step in to manage healthcare and/or finances should the person creating the estate plan become mentally incapacitated.
I personally know a lot of professional fiduciaries in the San Francisco East Bay, and I know which ones to recommend to my clients.
2. Elder Law Litigation (Probate, Trusts, Conservatorships)
Another way that professional fiduciaries play an important role in probate law is when there is litigation over a Trust, Estate, or Elder Law matter. Sometimes the court feels that it is best for all concerned to engage a third party professional to act as a Professional Trustee or Conservator. In the case of a Trust litigation where funds are at stake, the professional trustee (fiduciary) will take over and ‘babysit’ the estate while the litigation is ongoing to make sure that no money is taken inappropriately or funds mishandled. Professional fiduciaries might also step in to ensure that the medical care of an elder is handled appropriately during litigation. This is often characterized as a Conservator. Any role that can be filled by an "agent" (trustee, executor, DPOA agent, Healthcare agent, guardian, Conservator, etc.) may be filled by a Professional Fiduciary.
Why does the Court Choose Professional Fiduciaries over Family in some cases?
When I'm in court, I frequently witness the court looking at options in front of them regarding who should, for example, ‘manage the care of grandpa’, and not liking those options. In a case such as this, if a professional is put forth, the court is often more likely to appoint that person as Conservator or Professional Trustee, depending on the nature of the case.
Who are Professional Fiduciaries and how do you find them?
A recent well known example of a Professional Fiduciary being appointed is in the case of music legend Prince’s estate, where the court actually had a bank come in to manage the estate. The court felt that due to the complexity and size of the estate, a professional trustee, in this case a major corporate bank, was necessary. Many banks have a division of professional trustees to handle these large, complex matters.
For the clients I typically work with, an Individual or small fiduciary group (like California Senior Connection) is typically a better option, as the service is more personal. Each county has a list of licensed, professional fiduciaries listed online that can be referred to if needed.
Can appointing a Professional Trustee or Conservator avoid unnecessary litigation?
I recommend to my clients they seek the court’s appointment of a neutral third party professional in certain instances I see occur frequently in my practice. One such situation would be if the appointment of a neutral third party will help to avoid a big fight. Oftentimes litigation is over who is going to manage the care of an elder and/or who is going to manage the money after the elder dies. If the issue primarily revolves around who in the family is going to do it, then a neutral third party can resolve that issue. If there are other issues, then the litigants must work that out separately.
The Bottom Line on Professional Fiduciaries
In general, this is what professional fiduciaries or professional trustees are all about. They are licensed professionals who take on the role of either acting on behalf of someone or on behalf of an entity (like a trust), when there are either no family/friends to do it, or families are fighting over who will do it.
The professional fiduciaries I work with generally enjoy their jobs and find it to be a fulfilling career. They are people who enjoy helping other people, and often play a critical and necessary role in families, and within probate law as well.