The Professional Fiduciary

The Professional Fiduciary

As an increasing segment of our population ages, many find themselves challenged physically, financially and otherwise.  Consequently, this needy group becomes increasingly dependent upon family members, friends, and service providers to assist them in performing many tasks of everyday life that the rest of us take for granted.

Unfortunately, if family members and friends themselves become unable or unwilling to provide the care and assistance that these folks require, then reliance upon service providers becomes even greater to fulfill roles like conservator, guardian, case manager, trust administrator, etc.  Also, the multitude of news stories of elder abuse by care-givers, presumed friends or even family members continues to alarm us.  Scammers, thieves and others of ill intent are constant threats to the lives and hard-earned savings of many older individuals.  And minors, too, are not immune to these issues.  Regrettably, while trends for these incidents are on the rise, there remains inadequate staffing and/or funding of enforcement authorities at the federal, state and local levels to address these issues.

In recognition of these problems, the state of California enacted strict licensing of individuals who operate in fiduciary roles to ensure proper education, training and experience to protect the public.  Simply expressed, a fiduciary is someone in whom property and/or powers are entrusted for the benefit of another, and can include almost anyone in a high position of trust who provides personal or business services to others.  While some states differ in their role names and definitions, generally a fiduciary relationship occurs when an individual acts as a Conservator of a Person, Conservator of an Estate, Guardian of a Minor, Trustee or Trust Administrator, Executor or Estate Administrator, as well as other similar roles of high trust for the benefit of another person, like an attorney or doctor.  Accordingly, it behooves elders, minors, families, and business/nonprofit organizations to use only licensed fiduciary professionals to manage their personal and business service needs.  To fill these needed roles, consider using only a well-trained, experienced, and licensed specialist − a Professional Fiduciary, as defined* by the State of California.

A Professional Fiduciary provides critical personal services to seniors, disabled persons, and minors, as well as others who require special services that their families or businesses cannot perform themselves.  A fiduciary manages personal matters for clients including, but not limited to, daily care, housing, and medical needs, and can also mitigate or prevent conflict among family members by being an advocate and a defense line against abuse.  Also, a fiduciary carries the highest standard of duty and care defined in law and by many professional associations, above most other professions that are held to only a suitability or reasonableness standard, or less.  In financial dealings for a client, a Professional Fiduciary is subject to the Uniform Prudent Investor Act (UPIA), which regulates the investment responsibilities of trustees and other fiduciaries, such as executors, conservators and guardians of estates/property.

An attorney will usually be needed for most legal-related personal matters, such as the creation and filings of conservatorships, trusts and wills.  However, oftentimes a Professional Fiduciary can handle non-legal matters at far less expense than attorneys would ordinarily charge.  A Professional Fiduciary may provide financial management services including basic bill paying, trust and investment management, and, if needed, estate administration.  Also, other services may be offered in areas in which a fiduciary has special training and/or experience, or has professional affiliations, e.g., medical case management, care facilities selection, and various types of unusual investments, like collectibles and specialty real estate.  One should remember that attorneys are highly valued and necessary legal representatives, but are primarily involved with legal and court affairs, and are normally not in the personal care, investments or asset management businesses as specialists. Many Professional Fiduciaries perform in these and similar roles regularly.

On July 1, 2007 the Professional Fiduciaries Bureau (Bureau) in the California State Department of Consumer Affairs began operations and became responsible for licensing and regulating non-family member Professional Fiduciaries.  These include estate administrators, trustees, conservators, guardians, and agents under durable power of attorney as defined by the Professional Fiduciaries Act.  This Act was established in 2006 by SB 1550 (Figueroa, Chapter 491, Statutes of 2006), and since then the Bureau has issued about 1,250 licenses to Professional Fiduciaries to practice in California, of which only about 825 are active, as of May 31, 2021.  The Bureau’s mission is to protect the consumer through licensing and monitoring, and to ensure competent and ethical standards of practice for Professional Fiduciaries.

The Act defines a *Professional Fiduciary for licensing purposes as a person who acts as a conservator of the person, the estate, or person and estate, or guardian of the estate, or person and estate, for two or more individuals at the same time who are not related to the professional fiduciary or to each other; and also a person who acts as a trustee, agent under a durable power of attorney for health care, or agent under a durable power of attorney for finances, for more than three individuals, at the same time.  Persons excluded from CA State licensing as a professional fiduciary include certain family relations, and also attorneys, CPAs, Enrolled Agents for the Internal Revenue Service, registered investment advisers, registered securities broker-dealers, trust companies, and certain others, who may perform fiduciary duties while working within their scope of regular professional practice.

Requirements for a Professional Fiduciary license in California currently include providing proof of college education and/or relevant fiduciary experience, completing 30 hours of approved pre-licensing education credit, and passing a difficult two-part (state and national) competency examination.  Additionally, all applicants must pass rigid FBI criminal background and credit checks.  For renewal purposes, each year licensees must earn 15 hours of continuing education credit (2 hours must be training in ethics, plus other hours in relevant areas), submit to the Bureau an Annual Statement report of client-related matters, and abide by the Professional Fiduciaries Code of Ethics, to ensure that client matters are handled capably and reliably.  And, under the Act, the Bureau has an active enforcement role, which serves to maintain the high standards of practice that it obliges all Professional Fiduciaries to follow.

A family or business in need of a Professional Fiduciary can find help by contacting the Professional Fiduciaries Bureau.  The Bureau does not provide referrals, but has information to help consumers make informed choices.  Go to the Bureau online and click on the Consumers tab or call (916) 574-7340 for more information.  Also, anyone can easily learn the status of a Professional Fiduciary’s California-issued license by going to the Bureau’s web site, click on the License Verification link and search by name, license number, city, etc., and check if the license has an Active status; then click on the individual’s name for detailed license information.  Moreover, no Professional Fiduciary license reciprocity agreements exist yet with other states, since most states don’t require fiduciaries to be licensed.  A person must be licensed in California to practice as a Professional Fiduciary for clients residing in this state.  Therefore, CA State licensing provides the highly desirable layers of safety and security for families and businesses that need qualified professionals to handle their critical personal and business-related matters.  Currently, there are fewer than 700 active Professional Fiduciary licensees in California; so this career field has room to grow for qualified and talented professionals to provide needed fiduciary services to millions of potential clients.

In summary, an independent, licensed, Private Professional Fiduciary (PPF) is the one proven professional who can be relied upon to fill positions of high trust to help families, seniors, disabled persons, and minors, as well as organizations, requiring services that are beyond family or business capabilities.  The rigorous pre-licensing and annual post-licensing requirements ensure that clients have a well trained and experienced professional, operating with a high degree of ethics and fidelity to clients, to manage their important personal and business service needs.

Copyright © 2014-2022 Russell Pottharst, Principal/Owner of SoCal Private Fiduciary® USPTO Reg. Nos. TXu001922329, TXu001953739  −  All Rights Reserved

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