People need fiduciaries for a variety of reasons, but this article is written with elderly people who are incapacitated by dementia in mind. Dementia is an umbrella term that describes a variety of diseases that affect memory, attention, language, and problem solving abilities to such an extent that daily living is seriously affected.
I used to think only elder “orphans” would need the services of a professional fiduciary. I thought most people would have a son or daughter or other relative they could rely on in old age. I was wrong.
There are four basic scenarios that seem to play out for the aged with dementia:
- First, some elders have self-sacrificing relatives who serve them well. They visit regularly, make sure needs are met, make thoughtful medical decisions, handle money wisely, and don’t self-deal. These elders are fortunate.
- Second, some elders have well-meaning relatives who want to help but don’t have the skills to deal with finances or the time to care for them because of demanding full-time jobs, family and personal commitments, and geographic distance. These elders are in trouble.
- Third, some elders are neglected or exploited by self-serving relatives who abandon them once they’ve been admitted to a nursing home or make unreasonable medical decisions for them or use the court system as a battleground to fight over unresolved personal conflicts while pretending to be concerned about the elder’s well being. These elders are in trouble.
- Fourth, some elders have no one to help them – whether by chance or by choice. They’ve either outlived their support system or a mental illness may have hampered their ability to maintain caring relationships or they’ve alienated relatives by their own abusive behaviors. These elders are in trouble.
Elders in trouble need professional fiduciaries.
WHAT IS A PROFESSIONAL FIDUCIARY?
A “fiduciary” is a person (or company) who has been entrusted with legal authority and responsibility to make financial and/or personal decisions for another (the Principal). A fiduciary has an ethical duty to act in the Principal’s best interest when handling the Principal’s affairs. Fiduciary roles include: attorney-in-fact, representative payee, trustee, conservator, personal representative, health care agent, and guardian.
A “professional fiduciary” acts on behalf of individuals not related by blood, adoption, or marriage…and he gets paid for his services. Taking care of clients and their estates is the professional’s job. An independent, professional fiduciary usually charges an hourly fee for his services.
WHY APPOINT A PROFESSIONAL FIDUCIARY?
Professional fiduciaries are typically appointed when no one else is willing or able to serve. They may be appointed as the successor agent in case the primary agent/family member is unable to serve. The court may appoint a professional if family members are unsuitable or unable to be bonded or the case is difficult, intense, or downright nasty.
A professional’s experience, training, business contacts, knowledge of senior resources, and neutrality (no interest in the Principal’s estate) can be invaluable to a client. A professional doesn’t have to juggle clients’ crises with another job – handling crises is a part of her job. Fiduciaries (especially guardians) are often on-call 24 hours a day, seven days a week and must make life-and-death decisions for someone else. Professionals understand and assume these responsibilities.
Typically, professionals will have a service agreement or contract that spells out duties and fees in addition to the legal document of appointment. Unlike family members who may not act when the time comes (people are not legally bound to act as attorney-in-fact or health care agent just because they are appointed), a professional will be obligated to take care of the Principal’s personal needs and finances when necessary.
WHAT ABOUT UNSCRUPULOUS PROFESSIONAL FIDUCIARIES?
Some professional fiduciaries go “bad” – but this is the exception. According to the Investor Protection Trust, “the top three financial exploitation problems identified by experts are: theft or diversion of funds or property by family members, theft by caregivers, and financial scams perpetrated by strangers.” A vast majority of professionals care about their clients and do their work with integrity. They’ve usually spent years building their businesses and reputations and aren’t about to jeopardize either with unethical dealings.
WHAT DOES A PROFESSIONAL FIDUCIARY DO?
In short, most anything the Principal would do for himself if he were able. Professional fiduciaries may do the following:
- visit clients in their homes or in hospitals and ERs;
- buy food, clothing, home furnishings;
- arrange for meal or grocery delivery;
- work with clients to accept personal care assistance;
- hire home care agencies;
- oversee service providers;
- assist with funeral pre-planning;
- find places to live;
- hire movers/move managers and oversee the moving process;
- hire estate sale companies;
- make medical appointments and take clients to them;
- attend care conferences and interact with social workers, nurses, and therapists;
- ask doctors about medications and treatment options;
- make decisions about routine and end-of-life medical care;
- review medical bills;
- maintain medical records;
- consent to hospice care;
- apply for government benefits;
- prepare medical assistance applications;
- contact the SSA and VA for information and assistance;
- search for assets;
- open bank accounts;
- pay bills;
- maintain financial records;
- manage financial assets;
- prepare accountings for clients and the court;
- confer with attorneys for legal advice;
- hire financial advisors and accountants;
- file tax returns;
- review insurance coverages;
- maintain and sell real estate;
- meet with contractors;
- hire repair companies;
- engage realtors;
- make reports of bad situations to Adult Protection;
- file fraud claims;
- work with the police to recover stolen funds;
- attend court hearings; arrange for surety bonds;
- and, in general, try to find ways and means to enhance clients’ lives.
IN SUMMARY
Anyone who doesn’t have relatives and friends whom they would trust to act on their behalf if they’re incapacitated needs a professional fiduciary.
