Life Care Planning Are you a fiduciary? If yes, what are your duties?

Sandra W. Reed
Sandra Reed

Are you named as an agent on a power of attorney, financial or medical? Are you the trustees of a trust? Are you the executor/trix of an estate? Are you the custodian of a Transfer to Minors account? Are you a member of a corporate or nonprofit board?

If you hold any of these positions, you are a fiduciary, which means you hold the highest of duties and responsibilities.

What are a fiduciary’s duties?

• Duty of loyalty requires more than mere honesty

A fiduciary is held to a higher standard than acting with honesty alone. The agent, trustee, executor, custodian, and board member must carry out his or her duties with undivided loyalty to person or entity to whom the fiduciary responsibility is owed.

Duty of disclosure of all relevant facts

The fiduciary must disclose to the person or organization to whom the duty is owed all relevant facts. The fiduciary must make a full and accurate confession of all fiduciary activities, transactions, profits and mistakes. The duty to disclose mistakes can be painful but is, nonetheless, required. Under Texas law, a fiduciary who breaches the duty of full disclosure may be found liable for fraudulent concealment, even if the failure was unintentional.

A person or entity suing a fiduciary for failure to disclose does not have to have relied upon the disclosure to win the suit. Nor does the claimant have to have suffered actual damages to win. The fiduciary can be found liable even if he or she acted in good faith.

Where are fiduciary duties found

The duties of a fiduciary are found in four primary sources: (1) Texas statutory law; (2) Texas case and common law; (3) the document establishing the relationship and (4) consultation with of an attorney qualified to discuss the duties.

Anyone accepting a position as an agent, trustee, executor, custodian, or board member should be aware that allegations asserting a breach of fiduciary duty, especially of failure to make full disclosure, are easy to make and hard to disprove. Do not take on these responsibilities lightly. Become familiar with the law governing fiduciary duty, study carefully the document(s) establishing the relationship and consult a qualified attorney to make certain you understand the duties faithfully to avoid allegations of breach.

Sandra W. Reed practices Elder Law in Somervell County, handling probating of estates, drafting of wills, trusts, powers of attorney and deeds as well as estate and Medicaid planning.  She lives on beautiful Chalk Mountain and can be reached at (254) 797-0211; (817) 946-2809 or at sreed@kbzlaw.com.