California trust and estate disputes may be avoided or resolved with the appointment of a private professional fiduciary to act in an oversight role with respect to an elder’s care and/or finances.  In a recent post, we suggested the use of professional fiduciaries or bank trust departments to resolve conflicts among family member co-trustees.

Here we’ll focus on professional fiduciaries as an option, drawing on our experience as trust and estate litigation attorneys.  We usually represent family members in conflicts.  Sometimes we represent professional fiduciaries.

What is a private professional fiduciary?

Private professional fiduciaries are individuals licensed by Professional Fiduciaries Bureau.  The Bureau is one of a few dozen boards and bureaus within the California Department of Consumer Affairs that license categories of professionals.

California’s licensing scheme is relatively new.  In 2006, the Legislature enacted Senate Bill 1550, the Professional Fiduciaries Act.  The new law required those regularly engaged in the business of fiduciary services in and after 2009, with exceptions for licensed attorneys and certified public accountants, to obtain and maintain a license issued by the newly-created Professional Fiduciaries Bureau.  The primary provisions of the Act are codified at California Business and Professions Code sections 6500 to 6592.

Serving as a fiduciary for another does not necessarily require a license.  As the Bureau explains, the Act only applies to non-family member fiduciaries.  For example, “[y]ou must be licensed if you are acting as a trustee or agent under durable power of attorney for health care or for finances for more than three people or more than three families at the same time who are not related to you.”

The number of licensed fiduciaries varies from county to county.  Currently, Sacramento County has 26 active licensed fiduciaries, as compared to ten in Placer County, three in San Joaquin County, and two in Yolo County.  These numbers do not correspond with county populations – for example, San Joaquin County has almost double the population of Placer County but a much smaller number of fiduciaries.

Most fiduciaries belong to the Professional Fiduciaries Association of California, a trade group that provides continuing education programs.

Who is eligible to become a licensed professional fiduciary in California?

Applicants must have a bachelor’s degree or sufficient related work experience, pass a background check, pass an examination administered by the Center for Guardianship Certification, and complete 30 hours of approved education courses.

How can I tell whether a person has a valid license as a professional fiduciary?

The Professional Fiduciaries Bureau maintains an updated license look-up database on its website.  The database allows consumers to check on whether an individual has an active license, shows when the license was issued, and even reveals the dollar value of the assets under the fiduciary’s management as reported by the fiduciary.

When might I need a professional fiduciary?

Two scenarios are most common.

In the advance estate planning situation, a person with full mental capacity may name a private fiduciary to oversee care or manage finances in the event of future incapacity or upon death.  The fiduciary might be named as primary agent or in a backup role.  For example, if Margaret has a son named Steven, she might name him as health care and financial agent if she can’t make her own decisions, with fiduciary Flora as the backup in case Steven is unable or unwilling to act when needed.  Alternatively, if Margaret has two children who do not get along, she may simply pick Flora to act as her agent so as to avoid conflict between the siblings.

The other scenario, which we often see in litigation, is the selection of a professional fiduciary to oversee the care and/or finances of an elder with impaired mental capacity.  Hence, if Margaret has Alzheimer’s disease and never did estate planning, family members may agree on a private fiduciary to act as a court-appointed conservator over Margaret’s person and estate.  Or, if Margaret named her children as co-agents and co-trustees in the event of her incapacity, and the children spar over Margaret’s care and assets, they may ultimately agree on the appointment of a private professional fiduciary to take over, with our without the creation of a conservatorship.

Of course, if Margaret named her son Steven to act as her sole fiduciary, he may be reluctant to give up control to a professional fiduciary.  Steven may be concerned that his siblings will lobby the fiduciary to handle Margaret’s care and finances in a way that is disagreeable to him, such as by moving Margaret to an assisted care facility rather than providing her with in home care.

If Steven’s siblings are dissatisfied with his handling of Margaret’s affairs, they may seek appointment of a professional fiduciary so as to wrest control away from Steven.

How much do professional fiduciaries cost?

Family members often hesitate to involve professional fiduciaries because of cost concerns, but the costs can be much less than the legal fees that will be incurred by family members in continued litigation.

Fiduciary rates are variable.  Most fiduciaries charge by the hour and rates in the $100-150 per hour range are common.  Fees paid to court-appointed conservators or administrators of probate estates must be pre-approved by the Court so interested family members will have an opportunity to object if they believe that the fees are excessive.

Fiduciaries are entitled to hire attorneys of their choosing.  In high conflict situations, the attorney for the fiduciary may play a substantial role in guiding the fiduciary and often will take the lead role in communicating with attorneys representing interested family members.  Attorneys representing fiduciaries may charge at a rate two to four times that charged by the fiduciary himself or herself.  As with fiduciaries, the court must approve legal fees paid to attorneys for conservators and probate administrators.

In addition, fiduciaries may hire agents at varying rates to assist with tasks such as visits to residential care facilities and the preparation of accountings.

Who is the right fiduciary for a particular situation?

Family members should consult a local attorney to help identify and screen professional fiduciaries who might take on one or more roles in a situation.

Not all fiduciaries handle all matters.  For example, some fiduciaries prefer trust administration over conservatorships and probate administration.  Some fiduciaries are more willing than others to get involved when family members are at odds with one another.

Experience, personality, reputation, gender, age, rates, location and availability are factors that may be pertinent.  A fiduciary generally will make himself or herself available to meet family members so they can get a sense of the fiduciary’s background and potential approach to a situation.  For example, if Margaret resides in a particular assisted care living facility in Sacramento, finding a fiduciary who knows the staff at the facility may be helpful.

How do California courts view professional fiduciaries?

Judges manage many cases and often will be quick to appoint a professional fiduciary to take over as conservator or trustee in murky situations where family members angrily accuse each other of manipulation and undue influence with respect to an elder or dependent adult.

Experienced fiduciaries, and their attorneys, are well known to probate judges and court staff.  Typically, a professional fiduciary’s assessment of what is best for an elder will carry a lot of weight with a judge.  After all, the fiduciary has no past or present family relationships, and no stake as a beneficiary in the estate, to affect his or her approach to the situation at hand.  Hence, if the fiduciary takes an approach that is reasonable, the interested family members may be reluctant to ask a judge to overrule it given the likelihood that the judge will give some discretion to the fiduciary.

What’s the takeaway?

Family members should consider the appointment of a private professional fiduciary.  California’s regulatory scheme facilitates the identification and selection of a qualified individual.  A fiduciary can provide caring and experienced assistance to an elder in California, and may avoid or resolve intra-family conflict associated with the elder’s care and resources.

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