What is a Fiduciary?

What is a Fiduciary?

In probate matters you might encounter references to a “Fiduciary” and wonder what that means. In short, it means either the Executor or Administrator of the estate, whichever the estate may have. But there is more to the word “Fiduciary”.

Each probate estate will generally have either an Executor (when the person is appointed in a Will) or an Administrator (when the person is not appointed in the Will). Both of these positions are the same – having authority over the administration of the estate. To avoid having to reference both of the terms Executor and Administrator, some will use the term Fiduciary to include both terms.

But “Fiduciary” also has a more specific meaning that is important to understand.

One definition of a Fiduciary is:  “A person who holds a legal or ethical relationship of trust with one or more other parties. Typically, a fiduciary prudently takes care of money or other assets for another person.”

In probate, the Fiduciary, whether as an Executor or Administrator, has the responsibility of administering the estate in a manner that properly protects and serves the interests of all parties having an interest in the estate.

Parties with an interest in an estate often include beneficiaries, the decedent’s creditors, tax authorities, providers of services to the estate, and possibly others. These different classes of parties have competing interests and claims to the limited estate assets, and even parties within the same class often have competing interests and claims. Most simply, amounts paid to one party reduce the amount available for parties, and particularly the estate beneficiaries.

It is the responsibility of the Fiduciary to apply the estate assets to these competing interest holders according to law as it applies to facts of the particular estate. This may call for professional legal guidance.

Often, the Fiduciary is also a beneficiary of the estate, either named as beneficiary in the Will or as an intestate (no will) beneficiary under state law. In that case the Fiduciary has a conflict of interest, having the fiduciary obligation to serve the interests of all parties while also having his or her own interest in the estate.

As a Fiduciary, the Executor or Administrator cannot prefer his or her own interest over the other parties with interests in the estate. The Fiduciary must treat his or her interest impartially with relation to the other interests in the estate in accordance with the law as it applies to the facts of the estate.

If a Fiduciary misapplies the assets of the estate such that the parties with rightful interests and claims are damaged, the Fiduciary may be personally liable for those damages.

In many estates, the various claims and interests can be sorted and properly paid or distributed without much difficulty or controversy. In other estates, the competing claims and interests may be less clear and can even result in adversarial proceedings and litigation. For more information about the Kentucky Probate Process, click here.

The common thread in all estates is that the Fiduciary must handle the probate process and the estate assets with care and due attention to the various parties with interests in the estate. And, as noted above, this may call for professional legal guidance. For more about our Probate Lawyer services, click here.

The process of probating an estate can be unnerving, especially for those who have never experienced this before. We can guide you and take the stress and anxiety out of the probate process.