Written on November 9, 2012 – 5:00 am | by Elaine Blades
Executors, trustees and attorneys (under a Power of Attorney) all qualify as fiduciaries. A “fiduciary” is an individual or company who stands in a special relationship of trust, confidence and responsibility to another (or others).
There are a number of duties, powers and responsibilities inherent in the role. Foremost is a duty of care. Anyone involved in managing the propery of others is subject to the highest standard of care. You’re free to take risks and even act carelessly with your own money; not so, when the money belongs to someone else.
Not only must a fiduciary exercise an exemplary standard of care, they must be seen to do the right thing and properly account to “interested parties”. Interested parties include the grantor of Power of Attorney and the beneficiaries of an estate or trust.
All fiduciaries (including potential or future) should be aware that an “interested party” may call upon them to formally account for their actions. Although the attorney/executor/trustee may have acted honestly and in good faith, if they fail to keep proper records (including receipts for all disbursements), they may nonetheless find themselves “in trouble”. Not only may they be personally liable for any actual losses, they may be personally responsible for the costs of (re-)creating accounts after the fact and/or for payments or other disbursements not supported by receipts or vouchers.
A recent article in The Voice (the email newsletter of The Special Needs Alliance) explores the topic of the honest, yet careless or unprofessional fiduciary in more detail and encourages parents, particularly where special needs are involved, to consider appointing a professional to act as their executor and trustee.
As always, think very carefully about whom you appoint to act as yoru attorney/executor/trustee and, if yourself appointed, think twice before agreeing to assume the role.