What is a California Licensed Professional Fiduciary (CLPF)?

Professional fiduciaries provide critical services to individuals and families in need of independent management of financial or personal matters.  Such fiduciaries include trustees, conservators, guardians, and agents under durable powers of attorney.  Non-family member professional fiduciaries are licensed and regulated in the State of California by the Professional Fiduciaries Bureau of the Department of Consumer Affairs (www.fiduciary.ca.gov).  Requirements for licensing include passing a rigorous examination, compliance with reporting requirements, and adherence to the Professional Fiduciaries Code of Ethics, ensuring that client matters are handled responsibly and without conflict. 

When should you consider a Professional Fiduciary?

Many individuals choose to appoint a professional fiduciary to avoid burdening family members with the complex and time consuming responsibilities inherent to managing a trust or estate.  In many families, adult children’s responsibilities at work and home prevent them from serving in a fiduciary role, or they may not reside in a location that would enable them to serve effectively. Often, a professional fiduciary is selected in situations where family members would not be a good choice for fiduciary work due to the lack of appropriate skills, or the potential for conflict with siblings or other relatives.

How is a Trustee Appointed?

Trusts are created by language in a Will (a testamentary trust) or by a document created during life (an inter vivos or “living” trust).  The Trustee is named by the creator of the trust in the trust document.  In some cases however, the initial or named Trustee cannot carry out his or her duties either because of incapacity or death, and a Successor Trustee is named to take over those responsibilities.  If there is no Successor Trustee named in the trust document who can serve, the court has the responsibility of appointing a Successor Trustee, usually someone who is nominated by the trust beneficiary(s).

What is the role of a Private Trustee?

Private Trustees are professional fiduciaries who offer financial management services for trusts and their beneficiaries.  The responsibilities range from tax filings and bill paying to real estate and investment management.  The Trustee has the responsibility of carrying out the terms of the trust as set forth in the trust document.  

Trustee duties include the following:

·   Understanding of trust laws, document provisions and proper administrative practices,
·   Collection of trust assets, including financial accounts, real estate holdings and other non-financial assets,
·   Safeguarding/securing trust assets (including insurance coverage, where appropriate),
·   Investing trust assets according to the Prudent Investor Rule (as set forth in the California Probate Code),
·   Paying trust expenses,
·   Exercising discretionary powers provided in the trust or by state law,
·   Acting impartially in the application or payment of trust funds for a beneficiary-- balancing the interests of both the income beneficiary and the remaindermen (those to whom property is distributed at the termination of the trust).
·   Maintaining clear and accurate financial records,
·   Reporting to beneficiaries (as required by the California Probate Code),
·   Filing federal and state fiduciary income tax returns for the trust,
·   Submitting to a formal accounting procedure where and when it is required by the court or state statute, and
·   Making distributions to beneficiaries in accordance with the trust terms.
 

What is a Certified Trust and Financial Advisor (CTFA)?

CTFAs possess substantial levels of experience and education in wealth management, financial planning, and trust administration.  They provide their clients with expertise on the full range of financial needs, including fiduciary and trust administration, financial planning, insurance planning, estate planning, and tax and investment management.

The CTFA designation was created by the Institute of Certified Bankers (ICB) and the American Bankers Association (ABA) to establish formal recognition of fiduciary and trust practice as a fundamental element of wealth management, an area of expertise that had not previously been integrated into the field of financial planning.  To qualify for the certification, individuals must pass a comprehensive examination covering all of the fiduciary and planning disciplines, and must agree to abide by a strict code of ethics.  The ICB and ABA maintain rigorous standards of knowledge for the specialty areas of financial planning and trust management, and formally recognize those who meet these standards with the CTFA certification.