What to do if you want to resign as a fiduciary — don’t just walk away

Being appointed as a Guardian, Trustee or Agent under Power of Attorney can be an enormous task. Each of these appointments confers decision-making power and authority on the fiduciary, but at the same time, each of them involves tremendous responsibilities. In an ideal world, the document which appointed the fiduciary also appoints a string of successors and has a non-judicial way to designate a further successor.  When preparing such estate planning documents, it’s a good idea to make sure that the designated fiduciary has the contact information for the successors in case s/he needs to turn over the reins. This information can also be kept in the attorney’s file (or electronic database), since it is likely that the preparer of the estate plan will get the call about the resignation. The whole idea is to avoid logistical and financial havoc that can occur when a fiduciary resigns. Of course, the Guardian is court-appointed, on notice to all interested parties as well as the next of kin who would be entitled to the appointment, so if a Guardian needs to resign, further court proceedings will be required.

Since a Guardian is court-appointed, the Guardian is serving under a court order called a Judgment of Guardianship, and violation of a court order creates the risk of being held in contempt of court. If the Guardian wants to resign, s/he must notify the Court and seek permission to be released from all the obligations that were placed on him/her by the original Judgment. The Court will want to make sure that there is no “gap in coverage,” so to speak.  There will still be certain final responsibilities, such as filing of a final accounting and turnover of records. In non-emergent situations, the Court could require the Guardian to continue to serve for a reasonable period of time in which to provide the final accounting and initiate a legal proceeding on notice for appointment of a replacement guardian. If the ward is over 55, the Office of Public Guardian could be appointed temporarily.

Trustee and Power of Attorney appointments are private matters and the appointment is generally not made by court order. If the Trustee was appointed by the court — such as through the probate of the Will containing a trust — the Court has to accept the resignation and appoint the successor. In all cases, with or without the need for a court appointment of the successor,  the trustee has a legal responsibility to the Trust’s beneficiaries, and the Agent under Power of Attorney has a legal duty to protect the interests of the Principal. So if the fiduciary is becoming overwhelmed with the responsibilities of the job, s/he needs to contact the successor fiduciary and make arrangements to produce updated financial information and turn over all records before it is too late. Letting things just fall apart due to exhaustion or neglect is not a good plan and could expose the fiduciary to potential liability if damage results. And of course, getting legal advice is a good idea. By facilitating a smooth transition, everyone’s interests can be protected.

Call us to prepare trusts and estate plans, and for advice about guardianship and power of attorney matters ….. 732-382-6070

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