In estate planning, probate, guardianship and conservatorship, Colorado courts and individuals appoint people to positions of responsibility, care taking and decision-making. Examples of fiduciaries are personal representatives, trustees, guardians, conservators, persons with powers of attorney, and health care agents.
Fiduciary positions often require:
- Protection of money or property owned by another for the benefit of a third party
- Protection, care and advocacy for a vulnerable person
- Substitute medical or financial decision making for an incapacitated person
- Responsibility for the personal or business affairs of another person
Colorado law governs many aspects of fiduciaries responsibility, powers, limits, compensation and more. Being a fiduciary is a serious responsibility that can create legal liability if the person breaches his or her fiduciary duties.
Broadly, fiduciary duties fall within the categories of loyalty, care and impartiality. When a fiduciary fails to property carry out a duty, he or she is legally liable for any losses or harm incurred by parties to whom the fiduciary owes the duty of loyalty or care. Breaches may occur when the fiduciary ignores or neglects responsibilities, makes irresponsible decisions in his or her official capacity or engages in theft or self-dealing concerning property in his or her care, as examples.
How do you choose?
When you have to decide whom to ask, appoint, nominate or hire to act as a fiduciary, certain factors should be carefully considered. When the person’s duty to serve arises, you may be incapacitated or deceased, so the decision should be carefully made. For example:
- If a family member or friend is asked, does the person have the background, intelligence and time to carry out the responsibilities? Does the person understand the undertaking and is he or she willing to serve? Will the person be paid and is the money available sufficient for this? Are assets sufficient to pay for any professional guidance or representation the fiduciary might require such as accounting or attorney services?
- Will the choice cause family conflict?
- Would a professional fiduciary make more sense such as a lawyer or law firm, bank trust department, professional guardian or conservator, fiduciary service firm or other similar professional? The party hired should be carefully researched and screened. Associated fees and costs should be affordable for the particular estate or person.