Understanding fiduciary duty

On Behalf of | Nov 17, 2021 | Estate Planning |

When a person chooses a personal representative for his or her estate or someone to act for him or her under a power of attorney, that representative has a fiduciary duty. A fiduciary duty means that the representative must act in that person’s best interest, avoid conflicts of interest and self-dealing. He or she must not exceed their authority.

Unfortunately, this doesn’t always happen and there are signs that the representative may be breaching their duty.

Financial matters

Financial abuse can occur when the representative writes checks from the person’s account, diverts the person’s pension or Social Security check to him or herself, pressures the person to give him or her a gift, invests funds that pay the fiduciary bonuses or misuses the person’s credit card for their own expenses.

It may also be apparent where the fiduciary induces the person to change his or her will in the fiduciary’s favor, sells the person’s belongings like vehicles, jewelry or clothing without permission and other actions that benefit him or herself.

Also, if the representative is authorized to sell the person’s property, it must be sold for fair market value and the proceeds should be distributed according to the person’s wishes, not to enrich the representative.

Periodic reviews

It can be helpful for a family member or trusted friend to periodically meet with the person to review his or her financial documents, account statements or credit requests to ensure there is no improper activity.

In some cases, it may be appropriate to change the personal representative and update the estate plan. There is assistance available to do so.