FIDUCIARY DUTIES

If you are a Trustee of a Trust, a Personal Representative of an Estate or an Attorney in Fact (agent) of a Power of Attorney you have a Fiduciary duty towards interested parties. There are differences between these jobs, but for this short article, I will treat them as the same for simplicity sake. This area of law is quite complicated and you will need individualized advice from your attorney and other professionals before acting as a Fiduciary generally and periodically when specific tasks are to be undertaken.

The document that creates the Fiduciary duty is the first place you will look to define the scope of your job. In the case where you are appointed by the Probate Court as Personal Representative of a deceased person, you will look to the Court Order and title 11 of the Revised Code of Washington (RCW). In the case of acting as agent in a Power of Attorney, the Power of Attorney should give detailed instructions but RCW 11.94.010 et seq. should be consulted where there is still a question to be resolved. When you are acting as a Trustee of a Trust, the document creating the Trustee relationship should be read carefully. When there are still questions RCW 11.95, 11.98, 11.100, 11.104A should be consulted. If there are yet still questions, you should ask the Probate Judge/Commissioner for instructions under RCW 11.96A (TEDRA). Yes; this is complicated and I again refer you to your attorney for help. I will refer to the writing that creates the relationship as the "Document".

The following general rules should be observed by Fiduciaries, but be aware that there are many exceptions to these general rules that I don't have space for in this short article:

  1. The "Document" grant of powers and limitations of responsibility generally prevails over inconsistent law.
  2. There is a duty of undivided loyalty to administer the trust solely for the benefit of the beneficiaries.
  3. There is a prohibition to not "self-deal" in the trust assets.
  4. There is a duty to Account, usually annually, with full disclosure to the beneficiaries.
  5. There is a duty to invest assets prudently. Usually it is wise to diversify investments.
  6. There is a duty to be impartial between income and residuary beneficiaries.
  7. There is a duty to not abuse one's discretion granted in the "document".
  8. There is a duty to not overcharge for fiduciary fees which may be reviewed by a Court. Having said that; you do want to do a good job and will need to hire a team of professionals to carry out your duties. The team usually includes your attorney, a tax preparer and investment advisor. In the case of a Special Needs Beneficiary then a Geriatric or other care manager is highly recommended.
  9. Keep up to date books and records. If you are at all unfamiliar with good bookkeeping practices please hire a professional to do this for you.
  10. In summary to avoid personal liability; being honest and forthright to the beneficiaries and the Court is perhaps the most important and basic principal to practice as a fiduciary. Be cautious in accepting the job as a fiduciary and more careful yet in administering that job.