Hiring a Professional Fiduciary to help with Estate Planning

Hiring a Professional Fiduciary to help with Estate Planning

As a single mom with a young child, I knew I needed to have a solid plan for handling my financial affairs, for the benefit of my daughter, if something were to happen to me.

I talked with my family and friends and found that I didn’t have someone readily available who could take care of my financial life if something happened to me.  To solve this problem, I decided to hire a Professional Fiduciary who will step in and handle my finances if I am too sick to do it myself.  If I were to die unexpectedly, they would also take on the big job of settling my estate and managing the money I’ve set aside for my daughter for many years until she can do things herself.

Here is a summary of the roles that a Professional Fiduciary may include:

• Paying bills
• Collecting pension and Social Security income payments
• Collecting on life insurance policies
• Transferring bank and investment accounts
• Selling real estate
• Preparing tax returns
• Managing funds for a loved one
• Overseeing the health care of a person
• As a consultant to a family member or friend

In California, the Professional Fiduciaries are licensed and regulated and must follow a strict code of ethics.  One must take courses required by the licensing bureau, pass a lengthy exam, attend continuing education, have a clean background check and be bondable.  Arizona is another state that has enacted such regulations.

Hiring the Fiduciary is a gift to my family and friends whose lives are already busy with work and family commitments, and who wouldn’t feel comfortable, and didn’t have the knowledge to take over the burden of settling my affairs, if needed.  I know that they all love me, but just don’t have the bandwidth to serve in such an important role.

Here are the steps I took to implement this estate planning strategy:

1. Research options. I visited the Professional Fiduciary Association of California website pfac.org to make a short list based on location, their age, and the fact that I wanted to work with a woman.
2. Interviews. I considered what was important to me and had a conversation with each person where I explained my situation and asked lots of questions.  I found this list of questions to ask when hiring a fiduciary. I added a few of my own below:
   • How old are they? Will they be able to serve until my daughter is 30?
   • How would they deal with a young child who has just lost a parent, and who needed to enter the condo to collect her belongings and anything else that would bring her comfort at a very difficult time?
   • Would my daughter get along with them?
   • Could they follow my preferences with regards to managing the assets for my daughter?
   • Do they have staff or a built in back up person to take over if they cannot serve?
   • Could I name someone to be the trust protector to review billing, oversee the trustee, etc.?
   • Will they work with my personal team when dealing with my estate (attorney, realtor, investment advisor, CPA), or will they use their own people?
   • What is their onboarding process and best way to prepare them to take over my affairs?
   • How to do they charge? By the hour?  Or a percentage of my assets?  Is there a setup fee now or do they just bill me or my estate at the time of service?
3. Decide.  I chose to hire a team of Fiduciaries that work at the same firm, for a built in back up plan and the peace of mind it gave me.
4. Update estate plan documents. My attorney will update my estate planning documents with the specific language naming the new Fiduciaries.  The Fiduciaries will be added as my Financial Power of Attorney, Executor in my Will, and Successor Trustee in my Trust.
5. Create a summary. I am creating a digital record of all my financial items for the Fiduciary which will include my bank/investment accounts, beneficiaries, life and disability policies, professional partners (CPA, realtor, financial advisor, insurance agent), tax returns, home records, and any other relevant information that they may need.

Liz Gillette here at MainStreet Financial Planning created a Money Tip on how to create a Life Organizer which is very useful for keeping this information in one spot.

6. Write a letter of intent. This letter explains my preferences and specific things I want them to know about my family situation.  It includes my intent for how I’d like my money to be used to support my daughter (education, down-payment for a home, travel to see family, experiences, etc.). The Fiduciary will have discretion on how to use the funds, but any input I can give them will be helpful to them as they do their job.
7. Onboarding with Fiduciary. Once the estate documents are signed, I will follow the process outlined by the Fiduciary to get set up in their system. Most have a questionnaire and a secure online portal for clients to share documents.

• • Complete their questionnaire.
  • Provide a copy of new estate plan documents, letting them know where the originals will be.
  • Provide a summary of financial situation.
  • Provide a letter of intent and preferences.

8. Notify family or close friends. I will notify my family members and best friend that I have set up this relationship, so they know who to contact if something happens.
9. Provide updates as needed. Finally, I plan to provide updates each year to the Fiduciary of any changes or new accounts that I have.

For more information on Professional Fiduciaries in California, please visit their website to read more and see if this option could work for you.

I know this is a lot to think about. Remember that we are here to guide you.  If you would like to talk through your estate plan concerns, please contact us.