The 5 Roles of Your Fiduciary

Posted by Ned Armand, President of Eastern Point Trust Company on Apr 27, 2015

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Fiduciaries often take many roles when performing their job. Not all are the same, despite following similar role guidelines.

Key Takeaways

  • Not all fiducaries share the same principles, even though the guidelines of their roles are strict.
  • It is important to understand fiduciary roles and resposabilities when appointing your trustee.
  • Third-party, instiutional trustees are often more accurate in performing fiduciary duties, in contrast to a personal trustee whos decisions may be clouded by their personal relationship with the grantor.

 

The Roles of a Fiduciary

After understanding what a fiduciary is, it is important to know the roles fiduciaries have. Knowing that fiduciary relationships entail upholding certain duties – (1) the duty to act loyally to another party and (2) the duty to care for another party, is critical because it will help you differentiate between fiduciaries and non-fiduciaries.

Fiduciaries wear many different uniforms and carry many different responsibilities. Fiduciaries can be your mother, your neighbor, your financial advisor or preferably your professional independent trustee. Whatever their titles may be, their roles are all the same. Here are five to start off:

  1. The altruist. Fiduciaries may not profit from their relationship with another party, unless they have contractual consent by that party.
  2. The law-abider. Fact: fiduciary relationships are the strictest duty of care governed by the United States judicial system. Penalties are severe if a fiduciary breaks their role.
  3. The perfectionist. Since their roles must be upheld, by law fiduciaries must perform their duties perfectly to be effective.
  4. The master. The expertise fiduciaries often have distinguishes them from other types of financial planners. Fiduciaries can become certified fiduciaries, and must have an extended knowledge of law, finance, and trusts.
  5. The trusted. A Trustee in the form of a fiduciary ensures that an individual’s assets are being used exactly how they intended for them to be used. The fiduciary is guided by the terms of the trust and by law.

Institutional Trustees and Fiduciaries

Third-party trustees are a great way to get the most out of your assets. Being that fiduciary relationships are highly revered, they can come at a higher cost. However, having the highest form of oversight may be worth it as you can enjoy peace of mind that your and the beneficiary(ies) trustee is unbiased and professionally held to the highest possible standard. Experienced low-cost, third-party trustees are not readily available, but Eastern Point Trust Co. offers extremely affordable robo trustee services such as Kiss Trust.

Download a Personal Trustee Checklist See How Kiss Trust Compares

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Tags: Fiduciary Duty, Fiduciary Roles, Robo-Trustee, Fiduciary Relationships

Fiduciary 102 –– Fiduciary Duties

Posted by Ned Armand, President of Eastern Point Trust Company on Apr 18, 2015

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Understand the meaning of fiduciary duties, because it is essential to picking your trustee.

Key Takeaways

  • Fiduciary relationships are followed by a severely stric code of conduct, which is heavily enforced in the court of law.
  • Understanding the duties of fiduciaries is essential when appointing a trustee.
  • Not all financial servicing agents, such as brokers and advisors, abide by fiduciary standards, whereas institutional trustees, such as Kiss Trust, must.

 

Fiduciary Duties

Fiduciaries are an essential element in today’s financial world. Their impact is felt across the financial sector. But since fiduciary does not always describe those who manage or invest assets (e.g. Financial Advisors), it is important to understand the duties that fiduciaries have so you know whether you are involved with a fiduciary or non-fiduciary.

Fiduciary relationships must conform to the Prudent Person Rule (1) the duty to act loyally to another party and (2) the duty to care for another party. Also, no fiduciary operates without a relationship to a Beneficiary.

The relationship between the fiduciary and the Beneficiary should be “arm’s-length” and fully disclosed.  In some instances, the fiduciary may revoke access to assets from the Beneficiary. These acts are taken in the best interest of the Beneficiary. For example: The fiduciary may delay scheduled payouts when the Beneficiary is suffering from substance abuse, or facing a legal threat. In those cases, withholding access protects the assets of the Trust and preserves those same assets from misuse or the claims of the beneficiary’s creditors.

Understand that the duties of a fiduciary require multi-disciplined expertise and should not be performed by those lacking same. As stated in our Fiduciary 101 blog, an independent institutional fiduciary (trustee) is usually the safest choice when planning the management of your financial affairs.

Take the next step: Create your individual living trust, provided with lifetime fiduciary services. Visit Kiss Trust to learn more.

 Dive Deeper Into the Meaning of Fiduciary Duties

 

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Tags: Trustee, fiduciary, Prudent Man Rule, Fiduciary Duty

5 Frequently Asked Questions About Fiduciaries

Posted by Ned Armand, President of Eastern Point Trust Company on Apr 15, 2015

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If you do not understand the roles of a fiduciary you probably should, but you are not alone. 


 

As the term fiduciary begins to circulate throughout the financial news, it may raise questions for those who don’t know what a fiduciary is, or those who don’t work directly with the term. The fact of the matter is that the term is very important to nearly everybody, and could have material implications on upcoming legislative policies. We believe it’s a good time to review what a fiduciary is and how it impacts you with a new series: Fiduciary Basics.

What Is A Fiduciary?

A common substitution for the term fiduciary is trustee. Fiduciary goes beyond that, however. The term originated from the Latin root word fidere, meaning to trust. As the word evolved, it acquired new pronunciations and meanings. From fiducia (trust) to fiduciarius, the word found its resting place in the 16th century as fiduciary. Thus, anyone can be a fiduciary. In finance, however, fiduciary usually relates to the involvement of a professional trustee acting in the best interest of their client, without acting upon any self-interest. This is called the Prudent Person Rule.

So who are fiduciaries? A fiduciary can be anybody who principally acts with goodwill, honestly, and prudently on behalf of another party (often involving money). To illustrate, a man approaching his final days, Bill, plans on establishing a trust fund for his four grandchildren using a self-help trust creation platform (link Kiss Trust or Memorial Trust). Bill creates an individualized trust and funds it using assets from his bank account, 529 plans, real estate, or by assigning the death benefit of his existing life insurance policy. Those assets are held in the trust and the trustee applies the trust rules to determine when and how the trust assets will be utilized. By doing so, the trustee will manage and distribute funds based solely on how Bill intended to do so.

Fiduciaries are becoming a more prevalent topic in the financial spectrum, so understanding what a fiduciary is and how it influences your life is essential to successfully planning your financial future.

Fiduciary FAQ: 5 Simple Questions
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Tags: Trustee, fiduciary, Prudent Man Rule, Fiduciary Duty

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