Have you ever been asked to manage another person’s property and finances? Perhaps a family member named you as agent under a durable power of attorney, so that you can manage his finances if he becomes disabled. Maybe an elderly neighbor added your name to her bank accounts because physical limitations prevent her from leaving the house and she needs you to handle her banking. Helping a person in need is commendable, but you should understand the legal implications and risks before you accept and start to act.
If you agree to act as a formal or informal agent for the benefit of another person, you are likely serving as a fiduciary for that person (called the principal). A fiduciary relationship is characterized by the principal placing great trust, confidence and reliance in the fiduciary. It is often marked by an imbalance of power, because the principal may be disabled or weakened in some way. And the fiduciary relationship is abused when the agent acts for his own benefit, rather than the benefit of the principal.
Because of the unique nature of the fiduciary relationship, Michigan law imposes certain duties on those who serve as fiduciaries:
Professional fiduciaries (such as trust departments at banks) are familiar with the governing legal principles. Laypeople serving in a fiduciary role are often unfamiliar with the concept and implications of fiduciary duty, which can create a perilous situation for the fiduciary.
Additional warnings to consider:
Too often, a layperson serving as a fiduciary consults an attorney only after he/she has been sued for violating a fiduciary duty. If you are managing another person’s property or finances, you should get legal advice on how to perform that role early, often and before any problems arise. The estate planning attorneys at Warner are prepared to help you.
