In many families, someone is eventually asked to step into a financial or legal role on behalf of a loved one. That person may be a trustee, an agent under a power of attorney, or a conservator. All of those roles are considered fiduciaries.
A fiduciary has both legal authority and legal accountability. It’s not just about being helpful—it’s about managing someone else’s property or decisions with strict standards and reporting responsibilities.
Whether you’re thinking about assigning a fiduciary, becoming one, or have recently been named, here’s what you should know about how to become a fiduciary, what qualifies someone, and how the role of fiduciaries works.
What Is a Fiduciary?
A fiduciary is someone entrusted to manage financial, legal, or personal affairs for another person. In this legal relationship, the fiduciary must always act in the other person’s best interest.
Common examples of fiduciaries include:
- A trustee who manages property or money placed in a trust
- An agent under a power of attorney (POA) who handles financial or healthcare matters
- A guardian or conservator appointed by the court for someone who is incapacitated
These roles differ in scope, but all are governed by the same principle: fiduciary duty.
What Does Fiduciary Duty Require?
Fiduciary duty refers to a legal standard of care, not just good intentions. This duty includes:
- Loyalty – You must put the other person’s interests first.
- Care – You’re expected to make careful, well-informed decisions.
- Good Faith – Your actions must be honest and consistent with the person’s values or wishes.
- Disclosure – You must keep records, communicate clearly, and share key information.
Fiduciaries who do not follow these duties can be removed—or even sued—if their actions cause harm. You can read more about these duties in our article on types of fiduciaries and what each one does.
Who Qualifies as a Fiduciary?
Can anyone be a fiduciary? In general, any competent adult can be named a fiduciary. However, someone with a conflict of interest, financial mismanagement history, or criminal background may not be a good fit and may be disqualified in professional settings.
For example:
- A family member can be named as a trustee in a living trust.
- A friend or relative may serve as an agent under power of attorney.
- A court may appoint a licensed professional fiduciary when no suitable family member is available.
In California, professional fiduciaries must meet specific licensing standards set by the Professional Fiduciaries Bureau.
Types of Fiduciaries and Their Roles
Understanding the differences between fiduciary roles helps avoid confusion and ensures proper planning.
Trustee
A trustee manages assets placed in a trust and follows the written terms provided by the person who created it. This can include managing investments, distributing funds to beneficiaries, and preparing annual accountings.
Related: Trust Beneficiary Rights in California
Power of Attorney Agent (POA)
This person is given the legal power to act on another’s behalf in specific matters, either financial, healthcare, or both. The role ends upon death or revocation.
There are several POA types:
- General POA – broad authority over financial affairs
- Durable POA – remains effective even if the person becomes incapacitated
- Medical POA – handles treatment decisions if the person cannot
Guardian or Conservator
When someone hasn’t appointed a fiduciary and can no longer manage their affairs, the court can step in and appoint a guardian (for personal care) or a conservator (for finances).
Signs of cognitive decline or financial exploitation often trigger this process.
How to Become a Fiduciary in California
Becoming a fiduciary depends on the type of appointment:
Private Appointment (Non-Licensed)
If you’re named in a:
- Trust document (as trustee)
- Power of attorney (as agent)
- Will (as executor)
If so, you are considered a fiduciary by designation. You don’t need a license, but your responsibilities are still legal.
Professional Fiduciary Licensing Requirements
California law requires you to become a licensed professional fiduciary to serve multiple clients or be appointed by the court.
Fiduciary Licensing Requirements:
- Complete an approved educational program
- Pass the California Fiduciary Licensing exam
- Submit a background check
- Apply through the Professional Fiduciaries Bureau
- Complete continuing education for license renewal
How Do You Know If You Are a Fiduciary?
If your name appears on a legal document such as a trust, POA, or conservatorship order, and you’re authorized to act—you are a fiduciary.
To prove you are a fiduciary, you may need to provide:
- A notarized copy of the power of attorney
- Court-issued letters of conservatorship
- The official trust document naming you as trustee
Financial institutions, care providers, and courts may ask for this proof before allowing you to take action.
What Powers Does a Fiduciary Have?
Fiduciary powers depend on the role and the document or court order granting authority. Common fiduciary powers include:
- Paying bills and managing bank accounts
- Overseeing real estate or business operations
- Coordinating in-home care or facility placement
- Making medical or end-of-life decisions
- Filing tax returns and financial reports
Fiduciaries must always act within the limits of their authority. Going beyond those powers, even with good intentions, can lead to personal liability.
What Are the Risks and Responsibilities?
What Are the Risks of Being a Fiduciary?
While rewarding, fiduciary roles involve real risks:
- Legal liability for mistakes or negligence
- Emotional strain, especially in family disputes
- Time-consuming tasks like reporting and recordkeeping
Some people assume fiduciary duties without realizing how much is involved. That’s why asking questions early and seeking support when needed is important.
When Should You Appoint a Fiduciary?
Ideally, fiduciaries should be appointed before there’s a crisis. This includes:
- Creating a living trust with a named trustee
- Assigning a durable POA
- Choosing a healthcare proxy
Early planning gives you more control and reduces the chance of court intervention later.
If a loved one is already showing signs of needing help, unpaid bills, confusion about finances, or memory loss, it may be time to act.
Supporting Fiduciaries and Families in California
Fiduciary roles are complex—and the stakes are often high. That’s why clarity, documentation, and legal compliance matter.
Smith Marion assist families and professionals with:
- Fiduciary accounting accepted by California probate courts
- Trustee support for families and professionals
- Coordination with attorneys, care managers, and tax professionals
If you’ve been named as a fiduciary or are helping a parent prepare for the future, it’s important to understand your responsibilities and available options. The right support helps prevent errors and protects everyone involved.