Bay Area Estate And Tax Planning Law Firm

The importance of communication when serving as a fiduciary

On Behalf of | Jan 27, 2025 | Fiduciaries |

Individuals who have close relationships with those planning their estate and those acknowledged as responsible by their loved ones could end up serving as the fiduciary of an estate. Both personal representatives assisting with estate administration and trustees managing a trust’s assets serve as fiduciaries.

They have a duty to act in the best interests of the beneficiaries who may receive assets from the trust or the estate. Those serving as fiduciaries have an obligation to competently manage resources, comply with the law and follow the instructions provided by the testator or trustor.

If beneficiaries question the intentions or actions of a fiduciary, they could potentially initiate litigation seeking to remove them from their position or hold them accountable for financial losses sustained by the estate or trust. Proactive communication is one way for personal representatives and trustees to fulfill their fiduciary duty and limit their risk of legal challenges.

Creditors need to know about the estate

One of the most important responsibilities of a fiduciary administering an estate is to effectively communicate with creditors. They have a limited window of opportunity in which to send direct notice to known creditors and publish notice for other parties with an interest in the estate.

The failure to follow the right procedure can result in litigation against the estate. Creditors not given appropriate notice about estate administration can sometimes seek to hold the personal representative responsible for failing to provide notice as required by state law.

Beneficiaries need to know what to expect

Beneficiaries may initiate probate litigation if they assume that a fiduciary has failed to perform key duties. They can also take legal action if they believe that the fiduciary has violated their fiduciary duty through incompetence or misconduct, such as embezzlement. Proactive communication with beneficiaries can help them understand the steps that the fiduciary has taken and the current status of the trust or estate.

Keeping beneficiaries informed about estate matters can prevent them from becoming anxious about their inheritance or accusatory toward the fiduciary. Beneficiaries who have had an opportunity to review trust or estate planning documents and who know the status of the trust or estate are less likely to misunderstand the intentions of the fiduciary and take legal action against them.

Learning more about the responsibilities of a fiduciary can help people limit their risk of litigation during trust or estate administration. Fiduciaries who embrace communication and transparency are less likely to face controversy or to become financially responsible for the financial obligations of the estate.

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