Fiduciaries & Fiduciary Services
1. What is a Fiduciary?
A fiduciary is a general term to describe an individual or a company that has the legal authority and the responsibility, to manage assets for the benefit of another person or see to the personal care and health of another person. You have probably heard of specific fiduciaries, such as “Guardians”, “Trustees”, or “Executors.” Some of these fiduciaries are appointed voluntarily under estate planning documents, some of them are appointed by the court.
2. What is a Conservator?
A conservator is appointed by the court to take legal responsibility and authority for the assets of another individual who cannot protect themselves. In some states, this type of fiduciary is referred to as the “Guardian of the Estate.”
3. What is a Guardian?
A guardian is someone appointed by the court to take legal responsibility and authority for the care of another individual who cannot protect themselves. In some states, this type of fiduciary is referred to as the “Guardian of the Person.”
4. What is a Personal Representative or Executor?
Also referred to as an Executor, a Personal Representative is someone, usually nominated under a Will, but always appointed by the court, to take care of the estate of a deceased individual as part of the probate proceeding. It is usually a short term responsibility that includes collecting the assets of the decedent, paying their debts, and then making distributions out to the beneficiaries.
5. What is a Trustee?
Trustee is someone named in a Living Trust Agreement, or under a Will, to manage assets for the benefit of another person. For instance, a parent may set up a trust for their child under a Will or a Trust Agreement, and that document would name the Trustee who would take care of the assets during the prescribed term that the trust continues.
6. What is an Agent or Attorney-in-Fact?
Also referred to as an attorney-in-fact, this is the person named under a Power of Attorney to act for another individual. Most individuals should have a Medical Power of Attorney naming an Agent to make medical decisions if they cannot, and a General (Durable) Power of Attorney naming an Agent to handle financial matters if they cannot. The responsibilities of an Agent under a Medical Power of Attorney are similar to a Guardian, and the responsibilities of a Agent under a General Power are similar to a Conservator. The difference is that they are voluntarily appointed under a document, rather than appointed by the court.
7. What Responsibilities does a Fiduciary Have?
The specific duties and responsibilities for a Fiduciary depend on their specific role, but in general terms they must act reasonably and prudently on behalf of the person whose interests are protected. For instance, for fiduciaries with financial responsibilities like Trustees, Conservators, and Personal Representatives, there is a long list of specific duties they must respect, many of which are defined under complex common law or statute, including the following:
(A) They must prudently invest any assets under their control, balancing growth, risk, income, and other considerations under a specific set of Arizona statutes. Even if they have the best intent in the world, if they do not do this properly, they could be held liable for losses to the estate.
(B) They have a duty to act in the best interest of all the beneficiaries or the incapacitated person, avoiding impermissible conflicts of interests, and other similar issues you don’t have to worry about with your own assets.
(C) They need to see to the payment of bills and expenses in a timely manner, when that is part of their role, and keep accurate records of all money they spend and receive.
(D) The fiduciary must provide an accounting each year showing what amounts were received, and what amounts were expended and disbursed. In many situations, these accountings must be filed with the court for their approval in a specified format. In these situations, the court carefully reviews this information, and literally makes sure every penny is properly accounted.
(E) The fiduciary must file any required tax returns, including income tax returns for an incapacitated individual, or for an estate or ongoing trust, and in certain situations must file an estate tax return if the assets of an individual at death exceeded a certain amount.
(F) If a beneficiary is or may be qualified for certain needs based benefits like Medicaid, AHCCCS, or SSI, then the Trustee must act carefully within the terms of the document to protect that eligibility.
(G) Certain court appointed fiduciaries, especially a Conservator, have a requirement to post “bond”, a paid insurance policy against their mistakes or malfeasance. Especially in larger estates, it can be very difficult for an individual to have the credit necessary to be bonded in the required amount.
8. How Does Bogutz & Gordon Serve as a Fiduciary?
Allan Bogutz served as the Public Fiduciary for Pima County before founding Bogutz & Gordon, and from the beginning, the ability to effectively provide premium fiduciary services for clients was a foundation of the firm. The firm has actively served as Trustee, Conservator, and other fiduciary rules for well over 20 years, and because of that experience has the staff and training necessary to fulfill all of the duties that a fiduciary has.
In addition to attorneys, paralegals, and support staff, Bogutz & Gordon has two full-time care managers who are available to assist clients or beneficiaries with more than just financial issues. The care managers consult not only with their clients, but with doctors, care facilities, and family members, to ensure the best care possible for a beneficiary or client’s situation. Their duties and abilities include (1) Advocating for clients with physicians and other health care providers; (2) Serving as an emergency local contact with 24 hour on-call availability; (3) Providing a safety net of care for clients with no immediate family or friends to serve in this capacity; (4) Assisting with crisis management until responsible family members can be notified or arrive from out of town, as well as serving as their “eyes and ears” during more normal periods.
As a law firm, we have the ability to provide some legal services directly, in the course of our fiduciary management, for the beneficiaries, such as personal estate planning, as well as ALTCS and AHCCCS expertise, in-house tax preparation, estate and gift tax planning, estate planning and planning for charitable gifts and distributions, corporate, business, and real estate issues which arise in management or for beneficiaries, and similar areas.
We are also able to get bonded for amounts that would be difficult or impossible for an individual, allowing us to act where a family member cannot.
Our firm is large enough to have the staff and infrastructure to deal promptly and personally with clients’ and beneficiaries’ needs, and offer stability and security, with over $70,000,000 under current management. At the same time, we are small enough to make decisions directly, and not be bogged down by decisions made in committee and corporate compliance requirements from out of state offices.