Fiduciary Assignments

Pete Williams California Professional Fiduciary Trust. In California.

Examples of fiduciary assignments

When an individual or couple create a Revocable Living Trust, they normally act as their own Trustee(s). However, upon the death or incapacity of one or both, there is a need for a successor trustee. Normally, the trust document would designate a successor (which might even be a professional fiduciary); however, there are occasions when the named successor is unable (or unwilling) to act. There are also circumstances that call for a named and appointed trustee to be replaced - perhaps grievances have arisen between the beneficiaries and trustee. The beneficiaries may even implement court proceedings to have the trustee removed. In any event, there are many situations which call for a professional fiduciary to step in as a replacement trustee of a trust to manage the trust estate, oversee investments, sell or manage real estate, file trust tax returns and make beneficiary distributions all in accordance with law and the trust document.

There are instances in which a deceased person may not have done even the most rudimentary estate planning - not even a simple Last Will and Testament (ie, someone who dies "intestate"). In these cases, if the estate is of sufficient size and character, there will be a need for a probate proceeding and a named Personal Representative to clear title and transfer those assets to heirs in accordance with state law. While the personal representative will perform tasks similar to a trustee, unlike trust administration, they must report to the probate court on material matters affecting the estate. They will often be ordered to provide a detailed accounting of all post-death transactions. They must be knowledgeable of and follow the rules of the court. A capable professional fiduciary is often an excellent choice to take on such responsibilities.

When an individual ("Testator") executes a Last Will and Testament, they will normally name an Executor to "execute" the terms of the Will. As with the case of intestate succession mentioned above, there will be a need to involve the probate court with all of its requirements for reporting and permissions. Further, as with the cases of successor trustees, there could be an unexpected vacancy if the executor named in the Will is either unwilling or unable to perform the duties of the position. Executors, like successor trustees, and personal representatives marshal assets, collect income, manage property, file tax returns and ultimately make distributions to beneficiaries. They must be aware of and follow the rules of the court. A professional fiduciary can act in the capacity of executor in such cases by either being named in the original document or stepping in upon a vacancy.

A Conservatorship is a court-supervised process allowing for a Conservator to manage the personal care or finances (or both) of a person (the "Conservatee") who has been found by the court to be unable to handle their own affairs. As with intestate succession and Wills, the probate court is involved with all of its rules and reporting requirements - but, here, the person is still very much alive. The conservatorship may be "of the Person" in which case there is a need personal care for living and health care decisions; or, it may be "of the Estate" in which case there is a need for financial management and bill paying. A conservatee may be an elderly person who has lost the ability to handle their affairs or they may be a younger person with a disability which prevents them from handling their own affairs. A professional fiduciary can act as either or both the Conservator of the Person and Conservator of the Estate.

There are a number of reasons why a parent would want to gift assets to children or grandchildren. They may wish to move substantial assets out of their estate on to the next generations in order to minimize estate taxes. Or, they may wish to establish a fund to help a child or grandchild (or any person, for that matter) through higher education years. While gifts can be made outright, there is greater ability for control when assets are transferred to an irrevocable trust which is overseen by a trustee. At the same time, too much control by the grantor may lead to adverse tax consequences. This is why the trustee of such trusts are often non-related third parties. A professional fiduciary, not related to the grantor or to the child, can be a good choice to act as trustee of an Irrevocable Trust for the benefit of a child or grandchild whether created during life or after death.

Irrevocable Trusts for spouses are similar to trusts for children and grandchildren - rather than given outright, the assets are held in trust for the spouse's benefit. The purposes and goals of such trusts vary depending upon the circumstances. The gifts may come from the separate property of the giving spouse or from their share of the community. There may be a desire to maximize the application of current (estate tax) law for fear that it may not exist in the future. The giving spouse may want to ensure that a current spouse is cared for without interference from children or a former spouse; and, at the same time, they may want to ensure that assets "stay in the family" by requiring that upon the death of the spouse-beneficiary, the trust assets ultimately are distributed to certain children. Here again, a professional fiduciary is often a good non-related, disinterested choice to act as trustee to implement the terms of the trust to achieve the desired goals.

Upon the death of a business owner, there are many challenges that arise - especially when the business owner was the sole manager of the business. In order to keep a business afloat, there may be a need to hire a CEO, a CFO or others. There may be a need to liquidate part of the business to satisfy estate taxes. If a business interest is to be sold pursuant to a Buy-Sell Agreement, there is a need to oversee a proper valuation and fair treatment for the heirs of the deceased business owner. There are occasions when the family of the business owner is not capable or not interested in running the business. There may be tensions between children about how to properly run the business. A professional fiduciary with knowledge of business formation and operation can be very useful during the challenging post-death period.