CFP Notes: Professional Conduct and Regulation - Fiduciary

Duties
A fiduciary is any individual or organization that has been given the power to manage the assets of another. Some of the people who are considered fiduciaries are executors, administrators, personal representatives, and custodians. Fiduciaries are required to exercise loyalty in making decisions concerning the estate, meaning that the must be confidential and always act in the best interests of the party they represent. A fiduciary must also exercise care, diligence, and prudence when handling the estate of another. Finally, a fiduciary is charged with preserving and protecting estate assets; this can mean both protecting material assets and making productive investments.

Selecting
When selecting a fiduciary, one should look for a person who will most likely outlive the testator, has skills in legal and financial affairs, is familiar with the testator, and is an impartial person with strong integrity. Most people will use either a family member/friend or a corporate executor as a fiduciary. The former is likely to know the testator well and to have a personal interest in his or her welfare, while the latter may have more experience in financial matters. Probate attorneys are usually excellent at managing assets during the probate period, and they may have a good working knowledge of financial dealings. On the other hand, the administration costs of an attorney can be very high.