Your Responsibilities When Named as a Fiduciary

The purpose of this handout is to explain what you’ll have to do if you agree to be named in someone’s estate planning documents, or what would commonly be discussed by non-attorneys as:

“Will you settle my estate?” or
“Will you be my power of attorney if I lose my mind?”

You, the reader, should be the person who is being asked to perform these roles.

Estate planning documents typically consist of the following legal instruments, which will each have varying job titles and responsibilities:

The person settling a last will and testament after the creator dies is called a personal representative (in Florida).
The person handling medical decisions using a designation of health care surrogate document when the creator is incapacitated and unable to make decisions is called a surrogate or healthcare surrogate.
The person handling financial decisions and bill pay using a durable power of attorney document is called an agent or attorney in fact.
When someone creates a living trust, the person handling financial management of assets upon the creator’s incapacity or death is called a trustee.
When someone dies with minor children as survivors (younger than 18 years old), then a court process called guardianship is required and the person with ultimate responsibility and care of the minor is called a guardian.
If there is a challenge to a creator’s estate plan, capacity, or the creator is harming his or herself, them a guardianship could be required, and you may be named as preneed guardian in legal documents.

Each role has the separate scope of work, pay, time commitment, and liability. If you agree to be named now, you can always resign and refuse to accept an appointment, but general social norms dictate that you should advise the creator of these documents of your decision as soon as possible in order for him or her to find and be advised to suitable alternatives.

The general legal term principal is used throughout this handout, and it means the creator or signor of these legal documents, or the person giving you these powers under a valid legal instrument described above.

Let’s cover what the typical commitment looks like.

Personal Representative Under A Last Will And Testament

If you agree to be named personal representative (or “PR”), you will be typically committed to a 4 to 9 month obligation. This is a role played when the principal dies. This period can last longer when there is a difficult family situation. The amount of time required is very high right after death and when dealing with real estate issues or minor children. The PR role will feel like a part-time job for the first month or two, and then slowly feel less time consuming, but requiring labor during lunch hours and after work.

It is viable to serve as PR and you live in another city than the creator of a will. After handling issues requiring your physical presence to handle personal belongings, you can find people to help with tasks required to settle an estate who is living in that city and the attorney can work with you remotely through email and mail. Delegating “boots on the ground” tasks will increase estate settlement costs.

As PR, you will be dealing with the probate court, and there will be required court filings and potential reporting requirements.

The PR must work with an attorney, who would be paid from the assets of the deceased person at a set rate under Florida Statutes (unless the will says otherwise). The PR can take a salary set by law, but close family members who would be beneficiaries typically do not take the salary due to tax implications. Otherwise, I encourage PR’s who are dealing with difficult situations to take the salary because of loss of time at work and stress.

After the death of the creator of a will, the PR’s job is to pay valid debts, collect assets, pay final taxes, complete proper court reporting, keep beneficiaries in the loop, and make final distributions.

The main liability risk of a PR is to ensure proper payment of debts and taxes BEFORE distribution to the beneficiaries under the will. The PR must follow the terms of the will and file all proper court documents. The PR must keep the beneficiaries informed throughout the process.

Healthcare Surrogate Under Designation Of Healthcare Surrogate

If you agree to be named as healthcare surrogate, then your time commitment depends mostly on your integrity and the principal’s loss of capacity and competency. The designation of healthcare surrogate takes effect when the creator’s doctor deems the creator incapacitated to make medical decisions. This means you may ultimately not be required to ever do anything. However, if the principal becomes diagnosed with dementia or suffers a stroke, then you could be in the healthcare surrogate role for a long period of time.

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When you are a healthcare surrogate of an incapacitated, your minimal role must be to make final medical decisions such as: 1) placement in a long-term care facility; 2) course of medical treatment and final medical decisions (e.g. whether or not to treat the cancer or have a surgical procedure); and 3) whether or not to remove life support pursuant to instructions found in a living will. Your main responsibility when making these decisions will be to either (a) follow written instructions the principal provides to you, or (b) determine what the principal would want to do if faced with the decision and able to consciously make a decision. The minimal time requirement could be approximately 10 to 20 minutes a week when medical and care conditions are stable, but could easily ramp to 5 to 12 hours per week (or higher) if there are medical or care complications occurring.

The healthcare surrogate is not required to attend and transport someone to all medical appointments; this can be delegated. The healthcare surrogate is not required to take the principal into his or her home for care. The healthcare surrogate has ultimate authority to decide to move the principal to another city in order to receive care.

The responsibility of the surrogate is mostly for final medical decisions. Thus, a surrogate could perform the minimal labor described above. If the creator of this power expects more effort and time commitment out of the healthcare surrogate, then this discussion must be worked through between the principal and the named surrogate before an incapacity arises, and specific instructions for care can and should be put in writing.

The person serving as healthcare surrogate can be compensated for time relating to the primary duties set forth above at a customary rate charged by geriatric care professionals in such a role, which is approximately $70-90 per hour. The healthcare surrogate cannot charge such rates for transportation, basic information gathering during appointments, and other tasks that can be delegated to caregivers who typically charge $12-20 per hour.

The primary liability risk would be legal fees incurred in a guardianship proceeding when a surrogate attempts to make a medical decision inconsistent with the principal’s intent or when the surrogate fails or neglects to take obvious actions consistent with the principal’s intent. Such liability risks occur in guardianship court. However, extreme neglect leading into injury of the principal could result in criminal liability if the surrogate attempted to take on the appearance of being a caregiver (Florida Statues define caregiver as “person entrusted with or who has assumed responsibility for the care of an elderly person”). Due to the criminal liability potential of not seeking custodial care when it is required medically, I recommend either (a) placement in an assisted living or nursing home, or (b) using the principal’s funds to pay for around the clock care at home. Both options eliminate neglect potential liability.

Agent Under Durable Power Of Attorney

The Durable Power of Attorney grants certain authority relating to finances. This power takes effect immediately, however, the principal can continue to manage financial decisions to the date of the principal’s death or doctor declared incapacity.

The Agent has full authority to perform every act authorized and specified in the document. Such authority often includes transferring title of assets; selling and buying assets; managing financial accounts; settling accounts; borrowing money; entering a safe deposit box; making gifts; prosecuting and defending lawsuits; creating, modifying and revoking trusts; changing ownership or beneficiary designations of life insurance policies; executing necessary tax returns; forwarding mail; and doing anything that you can do regarding your estate, property and affairs. The Agent handles just about everything financial.

Once in “maintenance mode”, the job of Agent could require the same commitment of time you spend paying your own bills and managing your investments. There is a concentration of time and effort required to get to “maintenance mode”. Once you learn that you need to take control of finances, you will:

Need to figure out where all the accounts and investments are held
Need to review statements for monthly expenses and liabilities
Get each and every financial institution to recognize you as the Agent
Arrange for bill pay, online payment, and so forth to streamline the bill paying process
Consider consolidation of investment accounts
Understand the principal’s tax situation

These steps can easily take a full week off from work to handle, i.e. this is a 40 hours in one week job. After everything is “set up”, then the job can easily be handled by someone living out-of-state.

The person serving as Agent can be compensated for time relating to the primary duties set forth above at a customary rate charged by bookkeepers and geriatric care professionals in such a role, which is approximately $60-90 per hour.

Your liability risk relates to your refusal to act, or any devious act you do take. You should not disturb the principal’s estate planning wishes with your decisions. You should maintain a clear communication path with the Agent when you are performing your duties, if possible. You should not take for personal use. Otherwise, you will not be personally responsible for the principal’s debts and liabilities.

Upon the principal’s death, the durable power of attorney ceases to function and the personal representative under the will takes over.

Preneed Guardian In A Guardianship Proceeding

You could be named as preneed guardian, which means if there is ever a guardianship proceeding, then you’ll be in the primary position to serve as guardian. A guardianship is a court supervised proceeding, and it can be more stressful and intense than what you’ll hear about probate court proceedings.

A guardianship can occur in a few instances when there are valid legal documents present:

You could be accused or challenged by other family members while serving as Surrogate or Agent.
The principal could be harming his or herself physically or financially and the existing legal documents do not help.

During the guardianship proceeding, you will have the same roles as an Agent or Surrogate, but everything you do must be reported to the court and notice will usually be given to all involved family members.

The guardianship is very time intensive at the beginning of the proceeding and can remain time intensive due to court reporting requirements.

Your liability risks relate to your requirements to file court reports and proper management of the principal’s money. Many risks faced when you perform other fiduciary roles is limited due to the requirement to seek court approval before taking many types of actions.

Trustee Under A Living Trust

The Trustee is the person responsible for managing trust assets. Trust assets are financial accounts and real estate where the name of a trust appears on the statements. This discussion only refers to trust assets. The person named as Agent under the durable power of attorney controls assets not held under the name of a trust. Generally, trusts usually relate to investment management.

The Trustee has to perform many similar tasks as the Agent described above, but the scope of the Trustee’s authority and abilities relate solely to trust assets. The Trustee does not have medical decision making authority, except for paying for care and medical expenses. Depending on the family/beneficiaries, the Trustee will have to create full accountings and inventories of all trust assets.

In most cases, there is no court involvement with trusts.
After the principal’s death, the Trustee’s role is similar to a PR’s role described above.
Trustees are to be paid a reasonable fee by law and can refuse the fee. The typical fee is 1.5% to 3.0% of trust assets.
The Trustee’s liability risks are very similar those risks posed when serving as PR and Agent.

Guardian Of A Minor Named In A Will

If you are being asked to be someone’s guardian for their children, you will be essentially taking on the role of parent. You will provide shelter, meals, medical care, and education. The court is minimally involved if you are not responsible for money management.

Financially, you will work with the person named as the trustee under the parent’s will or you will have to manage the child’s inheritance through the guardianship court process. All fees for the guardianship will be paid through the inheritance. All costs of raising the child will be paid through the inheritance after court approval of each request. The child receives his or her share of the inheritance when he or she turns 18 years old.

You can get paid for these roles, and I recommend that you and the principal have a conversation about compensation.

Your liability risks will be similar to the liability you face if you were to neglect or abuse your own children. Financially, your liabilities will be governed by the guardianship court, meaning you will have court reports to file on a periodic basis and you’ll need to work with an attorney.

For more information on Responsibilities Of A Fiduciary In Florida, an initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (904) 398-6100 today.