Have you been chosen to serve as the personal representative of a loved one’s estate or as a trustee, guardian, or other important fiduciary role? If so, the fiduciary duties and legal obligations that come with this responsibility can seem overwhelming, especially when there’s conflict involved. To ensure you properly fulfill your fiduciary duties and are protected under the law, you need an experienced estate attorney to advise you and advocate on your behalf when your actions are challenged.
At Patterson Weaver, LLC, our attorneys have a successful track record in representation of fiduciaries in a wide range of complex scenarios. We provide straightforward advice and trusted guidance to ensure that your service as a fiduciary proceeds as smoothly and efficiently as possible. We take the time to get to know you and understand your situation so that we can tailor our representation to you.
What Is a Fiduciary?
A fiduciary refers to a person or entity that acts for the benefit of another person or people, who are typically called principals or beneficiaries, depending on the type of fiduciary relationship. Fiduciaries are expected to act in good faith and to uphold their principals’ trust. They also must act ethically and legally on behalf of their principals.
Fiduciaries typically handle financial or personal affairs on behalf of the principal. They may have professional relationships and duties with principals, such as attorneys or financial advisors. Or they may have a personal relationship of confidence or trust, such as when a family member or friend is selected to serve as a personal representative (sometimes known as an executor or administrator) of an estate.
Who Can Act as a Fiduciary?
Examples of fiduciary roles include:
- Personal representatives of estates (executors/administrators)
- Medical power of attorney
- Representative payees, who receive and manage public benefits payments on behalf of vulnerable recipients
For many types of fiduciary roles, such as a personal representative, guardian, attorney-in-fact, or medical power of attorney, the role is normally filled by a family member or friend of the principal. These types of fiduciary roles exercise a great deal of personal control over the affairs of the principal, so people will want to select someone they know well and trust.
When a family member or friend is selected to serve as a fiduciary, they may hire accounting or legal professionals to help with complex or technical aspects of the role. In other instances, such as with trustees, conservators, or representative payees, a principal or a court may choose a paid professional, like an accountant, bank, or law firm, to serve as a fiduciary.
What Are the Duties of a Fiduciary in Colorado?
Fiduciaries in Colorado normally have three primary duties to their principals:
- Duty of loyalty – The duty of loyalty requires a fiduciary to always act in the best interests of their principal. This includes:
- Avoiding all conflicts of interests
- Not engaging in self-dealing or taking advantage of the fiduciary role for the fiduciary’s personal benefit or to the detriment of the principal
- Always acting to benefit the principal’s interests
- Duty of care – The duty of care requires fiduciaries to make decisions in good faith and in a reasonably prudent manner. Fiduciaries fulfilling the duty of care must:
- Be engaged and informed
- Use independent judgment
- Consult experts when necessary
- Duty of full disclosure – Finally, the duty of full disclosure refers to a fiduciary’s obligation to provide all relevant and necessary information to the principal. This includes:
- Explaining how the fiduciary is fulfilling their duties and managing the principal’s affairs
- Notifying the principal of an actual or potential conflict of interest
What Are Examples of Fiduciary Duties?
Examples of fiduciary duties include:
- A personal representative of an estate collecting the property of a decedent; paying off the decedent’s debts, expenses, and taxes; and distributing the remaining assets to the decedent’s beneficiaries in accordance with the decedent’s will or intestacy law
- A trustee managing the assets being held in trust and distributing the income and principal to the trust’s beneficiaries, in accordance with the terms of the trust document
- A conservator managing a principal’s assets and income to ensure that the financial needs of the principal are met and to protect the principal from dissipating their assets
- A guardian protecting and advocating for the rights and interests of their ward
- An attorney-in-fact handling the financial and personal affairs of their principal, including paying bills or signing contracts on behalf of the principal or obtaining long-term care for the principal when they become incapacitated
- A medical power of attorney making treatment decisions on behalf of an incapacitated principal
Outside of the context of estate administration, other common examples of fiduciary duties include attorneys or financial planners advising their clients, or company executives and directors managing corporate affairs on behalf of the company’s shareholders.
No matter what situation you find yourself in, a trusted attorney from our firm can help you understand your fiduciary responsibilities and ensure you are abiding by the law.
What Is a Breach of Fiduciary Duty?
A breach of fiduciary duty occurs when a fiduciary fails to act in the best interests of the principal. A breach of fiduciary duty may involve a fiduciary taking actions that benefit themselves or a third party rather than benefitting the principal. It can also involve a fiduciary failing to provide important information to the principal or failing to disclose an actual or potential conflict of interest between the fiduciary and principal.
To show that a breach of fiduciary duty has occurred, a principal must prove four elements in their claim:
First, the principal must prove that they had a fiduciary relationship and show what duties the fiduciary owed to the principal. For example, this may include establishing that the fiduciary had been appointed as a personal representative of an estate or as a trustee.
The principal must next show that the fiduciary breached their duty, either by some action or by some failure to act. In some cases, this may require expert testimony to establish the exact legal duty and how the fiduciary’s conduct failed to comply with this duty.
The principal must also prove that they have suffered some sort of actual damage due to the breach of fiduciary duty.
Finally, the principal must show that the damage they incurred is directly linked to the fiduciary’s conduct. In other words, the principal must prove that their loss would not have occurred but for the breach of fiduciary duty and that the principal’s loss represented a foreseeable result of the fiduciary’s conduct.
If someone has accused you of wrongdoing while acting in your fiduciary capacities, get legal advice immediately.
How Our Law Firm Can Help Fiduciaries During the Estate Administration Process
At Patterson Weaver, LLC, our firm helps clients who are serving as fiduciaries in the estate administration process, such as serving as a trustee or a personal representative of an estate. Our attorneys can help you when you have been appointed as a fiduciary by:
- Reviewing the operative fiduciary documents, such as a trust or a will
- Explaining your fiduciary duties and obligations, as well as how other laws may affect performance of your duties
- Helping you gather the estate’s assets and setting up appropriate structures to manage them, such as bank or brokerage accounts or corporate structures
- Advising you as to whether probate or other legal processes are needed for you to fulfill your fiduciary duties
- Defending you if interested parties file suit or objections to challenge your performance as a fiduciary
- Representing you during any legal or administrative proceedings in Colorado if you live elsewhere, so that you will not need to incur the time and expense of traveling to the state unless required
- Aggressively fighting for your rights if you are involved in fiduciary litigation
When you turn to us for help with performing your fiduciary duties, we represent you personally, rather than the estate or trust that you act as a fiduciary for. That means we look out for your rights and interests as you fulfill your fiduciary duties. Contact us now for the strategic legal advice you need.
Talk to a Colorado Springs Estate Lawyer Today
If you need legal advice about your fiduciary obligation or need help in fulfilling your duties, contact Patterson Weaver, LLC today. Our team has extensive experience in representation of fiduciaries, and we can help you navigate the complexities ahead.