AS THE TRUSTEE OF A TRUST
By: David L. Crockett, Attorney, CPA
UCLA Law School , J.D. ’69, UC Berkeley ’66
901 Dove St., Ste 120, Newport Beach, CA 92660
THREE (3) TRUSTEE CHOICES IN ESTATE PLANNING.
When establishing a trust you must decide upon a Trustee. The Trustee may be an (1) individual such as a friend or relative, or (2) a licensed trust company, or (3) a Professional Fiduciary. This article describes licensed Professional Fiduciaries.
In deciding what type of trustee, the duties of the trustee should be considered. The job of the trustee is to carry out the instructions in the trust which typically arises after the death of the Trustors (the makers of the Trust). The trustee will have all of the trust accounts, securities, and property in his or her name as trustee. The trustee will have the sole legal authority to sign for and handle all money and property of the trust. The trustee collects the income, does the banking, pays the bills and distributes the trust income out to the beneficiaries according to what the trust says. The trustee must account to the beneficiaries and can be sued by any interested party if the trust is not followed or if there are any improprieties.
WHY USE A PROFESSIONAL FIDUCIARY?
If the trust estate is too large for relatives to be trusted with or if there is simply nobody available (such as trust makers who have not children or trusted relatives), or if the trust will be open for a long time (such as where a trust beneficiary is disabled), a Professional Fiduciary could be considered. Also, if the trust estate is too small for a licensed trust company to be interested in handling or if more personal attention is desired, then a Professional Fiduciary may be a good choice.
ESTABLISHMENT OF PROFESSIONAL FIDUCIARIES BUREAU & LICENSING OF PROFESSIONAL FIDUCIARIES
A “Professional Fiduciary” is defined in the CA Probate code and Business and Professions code as a person licensed to act as a professional fiduciary. No person shall act or hold himself or herself out as a professional fiduciary unless he or she is licensed as such. CA Probate Code §60.1. As a result of scandals and problems and damage to consumers caused by various people who were not licensed trust companies but who claimed to be professionals, The Professional Fiduciaries Bureau (Bureau) was created in 2006 and mandatory licensing was put into effect. The Bureau’s mandate is to license and regulate non-family member private fiduciaries, including conservators, guardians, trustees and agents under durable powers of attorney as defined by the “Professional Fiduciaries Act.” Professional Fiduciaries provide critical services to seniors, disabled persons and children. They manage matters involving their clients’ daily care, housing and medical needs, and also offer financial management services ranging from basic bill paying to being responsible for estate and investment management. Refer to the Bureau’s website for more information. https://www.fiduciary.ca.gov/
In order to be licensed, Professional Fiduciaries are required to pass an examination and to complete 30 hours of qualified education courses, and to complete 15 hours of continuing education each year in order to renew their licenses. In addition, Professional Fiduciaries must abide by a new Code of Ethics which establishes professional guidelines to ensure that the decisions they make are in the best interests of their clients, and that personal information regarding their clients is protected.
HOW TO LOCATE A PROFESSIONAL FIDUCIARY.
There is a Professional Fiduciary Association of California. Refer to its website for a directory. https://pfac-pro.org/
QUESTIONS TO ASK BEFORE HIRING A PROFESSIONAL FIDUCIARY.
The Professional Fiduciaries Bureau has a good article on this subject at https://www.fiduciary.ca.gov/forms_pubs/hire_fiduciary.pdf. There are 15 suggested questions you should ask of prospects. The bureau recommends interviewing at least three prospects.