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A Day in the Life of a Private Professional Trustee

Posted on August 17, 2016 at 4:00 PM Comments comments (0)

The word “Fiduciary” is not typically part of everyday conversation, and so I am often asked what it means to say I am a “private professional fiduciary”. The term “fiduciary” is a legal concept that arises in the context of a relationship. It requires a person who is assisting another, typically with a financial matter, to act with the utmost honesty, fidelity and good faith.


As a former bank trust officer and current Private Professional Fiduciary (“PPF”) licensed by the State of California, I am authorized to step into the shoes of someone who needs assistance to manage their personal and financial affairs as a trustee, executor, or agent under a power of attorney, and as such I am held by the courts to the highest level of trust and honesty.


In California, a PPF license is required if someone serves as a trustee or executor or holds powers of attorney for more than three unrelated individuals at the same time. In other words, a PPF is usually not related to the client and is licensed by the State of California to serve in a fiduciary capacity. To date, Texas has not adopted licensing requirements for professional fiduciaries, but Texas law does impose the same legal standards on persons who serve as fiduciaries as have been adopted in California and every other state.


A PPF can serve as an agent under a financial power of attorney or a health care directive, a trustee, or as executor of an estate. In most cases, the fiduciary is nominated by the principal in advance, although in some cases, when no nomination has been made, a court may appoint a fiduciary.


Many times it is not appropriate to select a family member or friend to serve as a fiduciary, either because they lack the necessary training and experience to fulfill the duties of this position, or because they are too busy with their own lives, or live too far away, to provide needed assistance. People of any age or socio-economic status may benefit from the services of a PPF.


Here are some real-life examples which illustrate the broad range of services a PPF provides and the important role a PPF can play in helping people manage some of the important transitions in their lives.


In a recent case, I was appointed to serve as a successor trustee for a senior who was receiving 24-hour in-home care. After reviewing her finances, I realized that the caregivers were being significantly overpaid, and worse yet, the payments were being made “under the table” by a well-meaning family member, so that no payroll taxes were being withheld and no income tax medical expense deduction could be claimed for these services. I was able to bring in new, licensed and bonded caregivers, and reduced the cost of care by over $100,000 per year. I also made sure that payroll taxes were paid and the income tax deduction was utilized.


In another matter, I was appointed by the court as a successor trustee for an individual with advanced dementia whose husband had passed on leaving her a home that was on the verge of foreclosure. With the help of legal counsel, I was able to resolve a number of problems with the home, including an easement dispute with a neighbor and concerns about possible environmental contamination. I ultimately sold the home and, with the proceeds from the sale, set up a special needs trust for the disabled client so that she would not be disqualified from Medicaid eligibility, which allowed her to provide an inheritance to her children who would otherwise have received nothing.


To achieve the best results for my clients, I understand the importance of working collaboratively with other professionals such as CPAs, investment advisors, attorneys, and insurance professionals to find solutions to help meet my clients’ needs.


As a prior bank trust officer, I understand that while both private and corporate fiduciaries do much of the same work, what differentiates private from corporate trustees is that a PPF can provide service in matters where the value of the trust or estate is below the minimums established by corporate trustees. Private fiduciaries tend to take on matters that may be more problematic, and they can usually be very flexible and nimble in addressing the issues presented. The fees of a PPF can be less than those charged by a bank or trust company and the level of service provided is more “hands-on.”


A case in point is the following matter. My clients lived in a care facility but had never disposed of their personal property or former residence. In order to make the residence a productive asset, I sorted through the clients’ belongings, donated useable items to charity and disposed of unwanted items. I then coordinated renovations to the property, obtained its fair market rental value, advertised the property for rent, interviewed prospective tenants, negotiated the rental of the property, and provided ongoing property management. The property provided an ongoing income stream until the clients’ passing.


As Trustee, I often manage real property which includes coordinating necessary repairs, obtaining appropriate insurance, working with tenants, and negotiating the rental or sale of residential and commercial properties.


I regularly assist clients by evaluating their income and expenses, paying bills, providing investment oversight, and coordinating caregiving services. In another instance, I coordinated the sale of a client’s personal property, which included two cars, and after touring multiple sites, found the client a new home in a board-and-care facility.


These are only a few examples of the many opportunities I have to help people manage some of the transitions in their lives. I find it very satisfying to be able to help people who may not be able to help themselves, and to find solutions to challenging situations. My goal is to provide services that add value to people’s lives and that makes it a good day in the life of a fiduciary!