Professional Fiduciaries for Older Adults: How They Work

Updated

Certified Care Manager, Aging Life Care Professional, and National Master Guardian Emeritus

You may have heard the term fiduciary but be unclear about what a professional fiduciary does, when you might need one, and how to choose one. Understanding the role of a fiduciary will help you decide whether one is right for your family and your loved one.

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Many older adults spend a lifetime saving and planning for retirement while also considering leaving an inheritance for their children and grandchildren. In some cases, there may not be a trusted family member to assume these duties, or no one in the family wants this responsibility.

Due to these circumstances and especially when dealing with large estates, some older adults may prefer to assign the duty of managing their assets to a professional.

As with any professional relationship, you and your family will want to use extreme caution when enlisting the services of a professional fiduciary. We will provide you with some tips on ensuring a trusting and productive relationship with a professional fiduciary as you care for aging parents.

Definition of a Professional Fiduciary

A fiduciary is a person or company who manages money or property for someone else in a legal arrangement. Sometimes the court appoints a fiduciary, and other times an individual chooses a fiduciary. A professional fiduciary is required by law to manage the person’s money and property for the client’s benefit and not theirs. 

A fiduciary can be an individual, a bank, or a corporation. A professional fiduciary is usually a trust officer, a CPA, an estate planning attorney, a Social Security representative payee, or a care manager. At a minimum, a professional fiduciary has a legal obligation to do the following:

  • To act and make decisions only in the interest of the person they are helping and not to benefit themselves
  • To manage that person's money or property according to state and federal laws
  • To keep that person's assets and property separate from their own
  • To keep meticulous records and report as required. Any professional fiduciary appointed by the court or a governmental agency must, for example, report to that court or agency.

What Does a Professional Fiduciary for Older Adults Do?

For older adults, professional fiduciaries perform a number of duties depending on the role they are assigned by the court or the individual. A fiduciary for an older adult has the same responsibilities that they would for someone younger. The terms used for fiduciary designation may differ depending on the duties assigned and the state where you live.

Here are some of the roles a professional fiduciary can fill: 

  • Trustee. A trustee is a person, company, or bank that holds and administers property or assets in a trust for the benefit of a third party.
  • Guardian. A guardian is a court-appointed person who oversees and manages healthcare, finances, and assets for someone who is deemed incapacitated.  In some states, the term guardian is used interchangeably with the term conservator.
  • Estate executor. An executor is a person or professional company assigned to administer a deceased person’s last will and testament.

A professional fiduciary takes care of bill paying and money management, and invests assets to benefit the person. They may act as healthcare representation only if assigned to do so.

The goal of any professional fiduciary who is working on behalf of an older adult is to represent their best interests. This includes protecting and investing their assets. 

How Much Do Professional Fiduciaries Cost?

Professional Fiduciary costs will vary greatly depending on their role, the company or individual you choose, and where you live. Some fiduciaries charge a percentage of the total estate they are managing. Others charge a flat hourly rate. So depending on the size of your estate, your costs could be in the thousands per year. 

For example, if you have an estate worth $10 million and the trustee charges 1% to 2% of the trust’s assets, that would be $100,000 to $200,000 a year in fees.  

Signs an Aging Adult May Need a Professional Fiduciary 

Several circumstances may suggest the need for a professional fiduciary. Some may come from concerned family members, and others could originate from the person who needs the fiduciary. In other cases, the court system may appoint a professional fiduciary for an older adult who has no one else to manage their estate.

Financial abuse or exploitation

Unfortunately, the financial exploitation of older adults is big business, and not all of it comes from professional criminals. Scams, fraud, identity theft, and outright stealing of assets can occur from caregivers, friends, and family members. Other times an older adult may succumb to an unscrupulous salesperson and others. Here are some red flags.

Money disappearing from accounts

Mysterious or suspicious withdrawals of money can be a sign of fraudulent activity. But, for you as a family member to stop this activity, you need some kind of legal authority. Suppose you can’t talk with the older adult and correct the problem because they are in denial. In that case, you may need to petition the court for guardianship/conservatorship so that you can become the fiduciary to manage your family member’s estate.

An older adult gives money to a caregiver or romantic interest

If you notice that an older adult is giving money to a caregiver or someone who professes a romantic interest this could be cause for concern. However, situations like this are not always clear-cut since people do have the right to give their money away. Signs of undue influence, threats, or empty promises may dictate the need for a professional fiduciary.

Cognitive impairment

Cognitive impairment such as Alzheimer’s or dementia may slowly erode an older adult’s ability to manage their finances properly. In these cases, you may want to consider a professional fiduciary to take over and manage the estate if no family member is willing to do so.

Family conflict

It is not uncommon for families to fight over the management of a parent or grandparent’s estate. When there is a family conflict and one family member petitions the court for guardianship/conservatorship to take over the estate, others could object to this petition. The court then has the option to appoint a professional fiduciary to take over finances.

The older adult requests a professional fiduciary

An older adult may request the services of a professional fiduciary for several reasons. Perhaps no one in the family wants the responsibility. Or maybe one family member is applying pressure to the older adult to give them money or expensive items. The other possibility is that family conflict over the estate causes stress to the older adult, so they hire a professional fiduciary. 

How to Find a Professional Fiduciary for an Aging Adult

There are several ways to find a professional fiduciary for an aging adult. You will want to use extreme caution in picking the right person, so take your time. Although rare, breach of fiduciary responsibilities can and does happen.

Ask for referrals

Ask for referrals from other people you know, your CPA, a geriatric care manager, or elder law attorneys. Other professionals work closely with trust departments, professional companies, and private conservators.

Contact your Area Agency on Aging

Aging services may have some good professional fiduciary referrals. Aging services might also point you towards professionals who are willing to work with smaller estates and have lower fees.

Do an online search

Search your area using phrases like “trust departments, conservators, and professional fiduciaries.” Once you find some you are interested in, you can begin the vetting process.

Contact the State Department of Guardianship Services or Adult Protective Services

State offices often have to work with professional fiduciaries for their clients who are being exploited. Try calling their offices to see if one of their staff can make recommendations. 

Ask your bank’s trust department for referrals

Your bank’s trust department may be able to perform all of the duties you need. If not, they could be in a good position to make reliable referrals. 

Questions You Should Ask a Professional Fiduciary

Asking questions may be the most important part of the process once you find some professional fiduciaries to interview. But keep one priority in mind. As much as you want a professional fiduciary to relieve you of financial responsibilities, you still have to monitor their actions by doing regular audits of their accounting. 

How much do you Charge?

Cost is essential when considering a professional fiduciary, especially if you don’t have a large estate. You will want some transparency regarding what costs are likely to be over the lifetime of the estate. Does the fiduciary charge a percentage and hourly rate and is there a cap on charges per year? How do they handle increases in fees?

How do you keep records of transactions and who has access to those records?

You should have access to all of the transactions and records regarding your estate. How do you view those, and who else has access? Ask about the accounting methods and how often you can expect financial updates.

Do you have other clients I can talk to about your services?

Ask about referrals to other clients the fiduciary is currently or has worked with. Call and speak with the clients about their experiences. Ask the clients the same questions you plan on asking the fiduciary. 

How and by what means do you communicate with the beneficiaries?

Ask the professional fiduciary how they communicate. Is it via email, paper copies of transactions, a secure portal? How often can you expect communication? Can you expect updates on changes in investments?

What specific experience have you had with administering estates?

Your estate may be small or quite large. You’ll want to know if the professional fiduciary has had experience with estates of that size. Larger estates require a great deal of expertise. Ask about other staff working with the fiduciary staff and their credentials.

Professional Fiduciaries for Older Adults

Professional fiduciaries serve an important role for older adults and their families. As with any professional relationship, you will want to feel confident and secure that the person you choose as a professional fiduciary has integrity. A good fiduciary will appreciate your close oversight of their work.

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