What is a fiduciary?
A fiduciary is someone who manages money or property for someone else. When you’re named a fiduciary and accept the role, you must – by law – manage the person’s money and property for their benefit, not yours.
If a family member or friend wants to name you their fiduciary to help them manage their money or property in case they’re unable to, they could do so through a power of attorney (POA). If you choose to accept this role and act on their behalf, you are required to follow the instructions and perform in accordance with the terms of the POA.
As a fiduciary, you have four basic duties:
- Act only in their best interest. Because you are dealing with someone else’s money and property, your duty is to make decisions that are best for them, not you.
- Manage their money and property carefully. You will have important financial responsibilities and must carry them out with care. You might pay bills, oversee bank accounts, and pay for things they need. You might also make investments, pay taxes, collect rent or unpaid debts, and get insurance for them, if needed.
- Keep their money and property separate. Never mix their money or property with your own or someone else’s. Confused records can get you in trouble with government agencies, like adult protective services, and the police.
- Keep good records. You must keep true and complete records of their money and property, or you could face legal consequences.
For more information on your role as a fiduciary, check out our guides to managing someone else’s money.