Guest commentary: What is a fiduciary and why would you need one?
By Tamara Skov & Shannon Dalton
As licensed professional fiduciaries, the first question we often hear when we mention our line of work is: “What’s a fiduciary?” It’s a good question, and the answer is both simple and complex.
After years of hearing the same inquiry, we thought it would be helpful to explainwhat fiduciaries do and why someone might consider hiring one.
WHAT DOES A FIDUCIARY DO?
A fiduciary is someone entrusted to act in another person’s best interests, often in situations involving money, health, or legal matters. In fact, the word “fiduciary” comes from the Latin word for trust, fiducia, and that’s exactly what we do: earn and honor people’s trust.
While fiduciary relationships exist across a number of industries, including law, real estate and finance, this article deals specifically with the role of the California Licensed Professional Fiduciary (CLPF).
Licensed by the state, CLPFs serve in a variety of roles, including as trustee, financial agent, health care agent, conservator, and administrator/executor. To earn a license, one must meet rigorous educational requirements, pass a state licensing exam, and adhere to strict ethical standards.
Below are descriptions of common roles that California Licensed Professional Fiduciaries fulfill:
- Trustee: In this role, a fiduciary willfollow the trustor’s wishes to administer the trust. This involves preparing accounts, making distributions, and filing tax returns. Fiduciaries also serve as trustees of Special Needs Trusts (SNTs), which are designed to preserve public benefits for clients with disabilities.
- Power of Attorney for Finances: In this role, professional fiduciaries access a client’s financial accounts that are not held in Trust in order to pay bills, coordinate with financial advisors and gather information for taxes.
- Power of Attorney for Healthcare: While friends or family often serve in this role, a professional fiduciary can be a healthcare agent, particularly if there is no one local to advocate for a client’s medical wishes.
- Estate Administrator: This includes managing the estate — assets under a Will, or when there is no Will — of someone who has passed away, including distributions to beneficiaries, accountings, and filing necessary tax returns.
- Conservator: Conservators are appointed by the Court to manage the healthcare and/or finances of someone who cannot do so themselves. This can include overseeing medical care, safeguarding assets, paying bills, filing tax returns and advocating for clients.
WHY HIRE A PROFESSIONAL FIDUCIARY?
Life is unpredictable and complex, and a licensed fiduciary can help sort through the mess of managing your own, or a loved one’s, affairs with expertise, integrity and empathy. They are also impartial, focusing on what the client wants, free from personal biases and family dynamics
Reasons you might need a professional fiduciary include:
- Family dynamics are strained: A fiduciary offers an impartial solution to help prevent conflicts over money or care decisions. Unfortunately, grief and money can exacerbate old tensions.
- You want to protect vulnerable loved ones: Fiduciaries are experienced in managing special needs trusts and coordinating care for those with disabilities or aging parents.
- You don’t have trusted friends or family nearby: Not everyone has someone to call upon to handle sensitive matters.
- You’re facing a complex financial or legal situation: A fiduciary can navigate the intricacies of trusts and estates, litigation, or complicated tax matters and investments.
Hiring a professional fiduciary offers peace of mind. A professional fiduciary has experience navigating California’s financial, health care, and legal systems, is discreet in managing sensitive personal matters, and communicates clearly what they are doing and what to expect.
WHY WE DO WHAT WE DO
As fiduciaries, we’ve seen firsthand how our work can transform lives. Whether it’s helping an older adult age gracefully, resolving family disputes with fairness, or ensuring a person’s legacy is honored, being a fiduciary is about more than managing finances or paperwork—it’s about fostering trust, stability, and peace of mind.
The next time someone asks, “What’s a fiduciary?” we hope this article helps answer the question. Maybe it will even inspire you to consider how a fiduciary could bring value to your life.
Tamara Skov and Shannon Dalton are the owners of Quinn Fiduciary Services, a professional fiduciary firm based in Santa Barbara.
