The idea of a person making financial decisions on someone else’s behalf can seem straightforward. And in the context of estate planning or long-term care planning, people often oversimplify fiduciary duties.
To understand why fiduciaries are so important and why you must be cautious when giving someone the permission and power to act on your behalf, you should know what, exactly, a fiduciary can do.
Common duties of fiduciaries
As this article breaks down, a fiduciary’s specific responsibilities will depend on whether they are a health care surrogate, a guardian, an estate executor or a financial adviser. However, some of the common duties someone acting as a fiduciary may have include:
- Selling your property
- Providing for the needs of your child
- Manage your investments
- Selecting new executives for a business
- Influencing your financial and legal decisions
- Hiring people for medical, financial, personal or professional reasons on your behalf
- Accessing your financial accounts to complete transactions like paying bills and making purchases
Seeing in more detail what a fiduciary can do can help you appreciate the importance of choosing your fiduciaries wisely.
Qualities of a competent fiduciary
Fiduciaries must make these and other decisions based on what is in your best interests, not their own. As such, a fiduciary should be:
- Capable of setting aside personal feelings
- Familiar with your wishes
This person may be someone you know on a personal level, or you might choose to hire a fiduciary.
When to select fiduciaries
Selecting fiduciaries can be necessary for many situations. For instance, you can name fiduciaries when you are completing an estate plan or setting up a trust. You may likely need a fiduciary if you are a business owner or regular investor. A fiduciary can be critical if you have or could someday have a serious, debilitating illness. If you have any legal or financial matters to manage, you can select a fiduciary.
When it comes to choosing someone to make vital decisions on your behalf, you should make intentional, informed choices. Doing so can give you and others valuable peace of mind.