What is a “Professional Fiduciary”?
WHAT IS A PROFESSIONAL FIDUCIARY?
Put simply, a professional fiduciary is a person who acts in a fiduciary capacity, as a business endeavor, in exchange for pay. There are numerous laws that define and govern the acts (and qualifications, and definition) of professional fiduciaries; this post will talk only about professional fiduciaries who act as trustees of trusts.
A professional fiduciary often acts as the trustee (or, more commonly in the case of inter vivos trusts, a successor trustee) of a trust when the settlor does not want to appoint a friend or relative to fill the role, or where none of the persons named in the trust is willing or able to serve as the trustee. (In this latter case, a professional fiduciary may be appointed by the court.)
The California Business and Professions Code defines a “professional trustee” as a person who acts as either a trustee or an agent under a durable power of attorney (for health care or finances) “for more than three individuals at the same time,” where those individuals are not related to the trustee (or each other) by blood, adoption, marriage or registered domestic partnership. (Note: a person who acts as the administrator of the practice of a deceased or incapacitated professional trustee also qualifies as a professional trustee.)
Professional fiduciaries are subject to liability if they act in a way that violates the code of ethics or professional rules that govern their behavior.
PROFESSIONAL FIDUCIARIES MUST BE LICENSED
In California, professional fiduciaries must be licensed by the Professional Fiduciary Bureau of the Department of Consumer Affairs. It is illegal for a person or entity to act as a professional trustee without a license.
However, licensed attorneys and CPAs, and people who are enrolled as agents to practice before the IRS, are exempt from the licensing requirements, and can act as professional fiduciaries (in this context, as the trustees of trusts) without obtaining a license from the Professional Fiduciary Bureau, so long as they are acting within the scope of their respective professional practices.
WHAT PERSONS OR ENTITIES DO NOT QUALIFY AS PROFESSIONAL FIDUCIARIES?
It’s important to note that the legal definition of professional fiduciary does not include:
- public or government agencies
- FDIC-insured institutions and their subsidiaries and affiliates
- trust companies
- the employees, agents, and officers of the entities listed above
- people who act as professional fiduciaries only in the context of acting as an investment advisor, broker-dealer, or the trustee of certain companies, in each case pursuant to certain, specific federal laws.
A family member serving as the trustee of a deceased family member’s trust also usually does not qualify as a professional trustee – even if (s)he receives remuneration from the trust. (However, if you have questions about this, please consult an attorney promptly.)
If you have questions about professional fiduciaries, or believe a professional fiduciary may have violated his or her legal duties, consult an attorney without delay for an evaluation of your legal rights and potential claims.
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Disclaimer: THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY, AND DOES NOT CONSTITUTE LEGAL ADVICE OR CREATE AN ATTORNEY-CLIENT RELATIONSHIP BETWEEN THE AUTHOR OR ROSS LAW AND ANY PERSON. Your legal rights and experiences may vary. Never use an online article (including this one) to evaluate your legal rights or claims. Consult an experienced attorney promptly to obtain a personalized evaluation of your claims, potential damages, and the various legal rights and options available to you.
You may lose or compromise your rights if you delay in consulting legal counsel. Most legal claims (and defenses), as well as legal and court procedures, are complicated and fact-dependent. If you believe you have a claim against someone who injured you, a lawyer who represented you in a previous lawsuit, or any other legal claim, consult an experienced lawyer immediately for an evaluation of your individual rights and claims.
