If you’ve named a Trustee, Executor, or Power of Attorney in your estate plan, or if you’ve been named one yourself, you hold a fiduciary role. This position comes with powerful legal responsibilities and serious ethical duties. At Clarity Legal Group, we educate clients and their fiduciaries through our annual Fiduciary School. We just completed this year’s program last week, helping families better understand their responsibilities and prepare with confidence.
In this article, we’ll break down what it means to be a fiduciary, the duties you must uphold, and how good planning makes all the difference.
What Is a Fiduciary?
A fiduciary is someone appointed to act on behalf of another person or estate with honesty, loyalty, and care. In estate planning, fiduciary roles include:
- Trustee or Successor Trustee – Manages assets in a Trust.
- Executor – Handles the estate under a Will after death.
- Agent under a Power of Attorney – Manages legal and financial matters during the Trustor’s life.
- Health Care Agent – Makes medical decisions if the person is unable to do so.
- Guardian – Appointed by the court to protect individuals who are incapacitated.
These roles are often filled by family members. While you don’t need to be a legal expert, you do need to understand your responsibilities.
Key Fiduciary Responsibilities
When a trust becomes irrevocable, typically after the Trustor passes away, the Trustee’s responsibilities begin in full. In North Carolina, these responsibilities are outlined in the Uniform Trust Code (NCGS Chapter 36C). Key fiduciary duties include:
1. Duty of Good Faith
Act honestly and in alignment with the terms of the trust and the best interests of the beneficiaries.
2. Duty of Loyalty
You must act solely in the interest of the trust and its beneficiaries. Mixing trust property with personal assets or using trust assets for your own benefit is prohibited.
3. Duty to Protect and Control Assets
You’re expected to take reasonable steps to collect, secure, and manage trust assets. This may include everything from taking possession of real estate to securing digital accounts.
4. Duty to Use Care and Skill
Act as a prudent person would under the same circumstances. If you have special skills or experience, you are expected to use them.
5. Duty to Provide Information to Beneficiaries
Beneficiaries have a right to know how the trust is being managed. You must provide relevant documents, respond to reasonable requests, and keep accurate records.
Trustee Powers and Authority
The Trustee has broad authority to carry out duties, but all actions must align with the trust’s terms and fiduciary responsibilities. Authorized powers include:
- Collecting trust property
- Managing investments (in compliance with the Prudent Investor Rule unless stated otherwise)
- Paying taxes and debts
- Distributing trust assets according to instructions
- Signing contracts and transferring real estate
- Hiring professionals (e.g., attorneys, accountants)
Fiduciary Mistakes to Avoid
Even well-meaning fiduciaries can make expensive errors. Common pitfalls include:
- Acting without legal guidance after the Trustor’s death
- Failing to inventory assets or change account ownership
- Not communicating with beneficiaries
- Overlooking digital assets like online accounts and email
- Mismanaging or prematurely distributing funds
Mistakes can lead to family conflict, tax penalties, and even legal liability.
The First Steps After a Loved One’s Death
If you’re stepping into your role as a fiduciary, here are some key first steps:
- Schedule an appointment with a trusted estate administration attorney.
- Locate the trust document and consult with your estate administration attorney to confirm your authority.
- Order multiple certified copies of the death certificate.
- Secure the decedent’s residence and valuables.
- Notify Social Security, financial institutions, and credit card companies.
- Create a complete inventory of assets.
- Ensure you preserve digital assets (email accounts, online banking, etc.).
Ongoing Duties of a Trustee
Your work as a fiduciary doesn’t stop after the funeral. Over the coming months (or even years), you may need to:
- File federal and state income tax returns
- Maintain casualty insurance on property
- Manage investments
- Provide annual accounting to beneficiaries
- Maintain detailed records of all expenses and distributions
This is where the support of a qualified estate planning attorney becomes essential.
How Clarity Legal Group Supports Fiduciaries
Our attorneys help fiduciaries carry out their responsibilities the right way. We assist with:
- Activating your role as Successor Trustee
- Obtaining new tax ID numbers for the trust
- Transferring financial accounts
- Filing tax returns and preparing accountings
- Making proper distributions and terminating the trust
Final Thoughts: Why Fiduciary Education Matters
Many people accept fiduciary roles without realizing the full weight of the job. That’s why we created Fiduciary School for our clients. We want to turn confusion into confidence. When your fiduciaries understand their responsibilities, your estate plan has a much better chance of succeeding.
If you or someone in your family is a fiduciary, or may be soon, make sure you fully understand your duties and responsibilities.
We’re Here to Help
The highly experienced estate planning attorneys at Clarity Legal Group walk with you each step of the way, from your initial planning session through your signing, and throughout life’s changes. If you’d like to book a consultation, click here or call us at 919-484-0012.
