Fiduciary Accounts

What is a Fiduciary?

A fiduciary is defined as someone acting in a position of trust on behalf of, or for the benefit of, a third party. It is someone who accepts the responsibility of taking care of the property or needs of another person.

Fiduciaries can fill a wide variety of roles. They may be court-appointed Guardians or Conservators. They can also act as Personal Representatives of estates. They also may act as Trustees of various types of trusts or Representative Payees for Social Security income and other income plans or as an agent under a Power of Attorney.


Are you acting in a Fiduciary Capacity and do not know which type of account to open?

CUSTODIAN FOR A MINOR UNDER THE CALIFORNIA UNIFORM TRANSFER TO MINORS ACT (CUTMA)
Account: CUTMA Account
This is a custodial account governed by the terms of the laws of California and allows gifts to be transferred to a minor. Once transferred, the funds in the account and all the earnings belong to the minor and cannot be revoked. When the minor reaches the age of 18, the funds are released to the minor by the custodian (unless a different age is specified on the California Uniform Transfer to Minor Account (CUTMA) signature card at the time the account was established with a maximum age of 25). At the time the account is to be released to the minor, the custodian and minor must submit a written request to change the account or release the funds directly to the minor. The funds MAY NOT be released directly to the minor without the custodian's consent. There may be only one minor and one custodian on an account at any given time.

Some examples of when a CUTMA would be used are:

  1. A grandparent would like to give gifts or transfer assets to a minor, perhaps for a car or for college.
  2. A minor is a beneficiary on a deceased member's account and the funds would be disbursed under a CUTMA account.


TRUSTEE FOR A CHILD ARTIST ACCOUNT (Coogan Trust Account)
Account: Child Artist Account, also known as Coogan Trust Account
This account type is required by law for all non emancipated minors providing artistic or creative services, such as an actor, actress, dancer, musician, comedian, singer, stunt-person, voice-over artist, other performer or entertainer, etc. This law requires that 15% of the earnings of the minor be transferred to a set aside trust. This account type may be established with or without a court order.

  • Without a Court Order – The account must be established by one parent or legal guardian. Only a parent or legal guardian may act as trustee.
  • With a Court Order – If the account is established per court order; the order will approve the contract and appoint the trustee. The trustee will normally be the parent or guardian. A copy of the court order must be provided to the Credit Union by the trustee or employer. If created by the court, the trust will continue to be monitored and controlled by the court. If a court order is presented, it must be reviewed to ensure that the account is established and maintained as per the order.


CONSERVATOR/GUARDIAN 
Account: Conservator or Guardian Account
It is an account in which a legal relationship is established. A person is legally appointed by a court to manage the personal and/or financial affairs of another person. The court will issue an Order of Appointment and Letters of Administration with specific instructions regarding the conservator's or guardian's authority and responsibilities. It may give wide general powers or limited specific powers. The instructions must be followed exactly by the conservator or guardian and cannot be changed without further orders from the court. These appointments may be for a minor, or an adult who cannot care for themselves.

There are three main types of Probate Conservatorships/Guardianships governed by the California Probate Code:

  • General Conservatorship/Guardianship:
    This type of conservatorship/guardianship is typically used for either older people who may have significant limitations due to aging, or younger people who may have suffered serious impairment from an accident.
  • Limited Conservatorship/Guardianship:
    These are typically set up for adults with developmental disabilities who cannot fully care for themselves; yet at the same time do not require the degree of care provided under a general conservatorship/guardianship.
  • Temporary Conservatorship/Guardianship:
    These are set up when someone needs immediate help, such that it would be harmful to wait until the conclusion of the conservatorship/guardianship proceeding to appoint a conservator/guardian. The duties of temporary conservators/guardians, which are specifically defined in the letters of appointment, may include arranging for temporary care, protection, and support of the conservator, as well as protecting the conservatee/ward's property form loss or damage.

Note: The probate court will appoint a conservator/guardian of the person, a conservator/guardian of the estate, or both, depending on the needs of the conservatee/ward.

There are 3 basic types:

  • A conservator/guardian of the person cares for and protects a person when the judge decides that the person cannot care for themselves. The conservator is responsible for making sure that the conservatee/ward has proper food, clothing, shelter, and health care. Depending on the conservatee/ward's ability to understand and make decisions, the conservator may need to make important medical choices for him or her.
  • A conservator of the estate handles the conservatee/ward's financial matters if the judge decides the conservatee does not have the capacity to understand and perform basic or complex financial matters.
  • A conservator of the person and estate is given the authority to manage and care for both the personal needs and the financial needs of the conservatee.

Being appointed conservator of the person does NOT automatically make that person the conservator of the estate, both authorities must be specifically addressed in the Letters of Administration. In addition, the court may list other restrictions, including specific time frames, which may limit the powers of the conservator.

For more information regarding conservatorship/guardianship, please refer to the following websites:
http://www.courts.ca.gov/selfhelp-conservatorship.htm
http://www.courts.ca.gov/selfhelp-guardianship.htm


REPRESENTATIVE PAYEE
Account: Representative Payee Account
This account type is established with the approval of the Social Security Administration in which a U.S. Treasury funds are issued to a person (the "Representative Payee") for the benefit of another person (the "Beneficiary"). The Beneficiary's funds cannot be commingled with the funds of the Representative Payee. Only funds from the Social Security Administration, such as social security or disability payments, may be deposited into this type of account. The Representative Payee only has authority over Social Security funds and not over the person or any other financial matters of the beneficiary.
Do NOT confuse authority of Representative Payee with other fiduciary authority; such Conservator, Guardian, Trustee or Power of Attorney.

A Representative Payee account would be opened when a child or an adult with a disability is eligible for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, and is incapable of managing these funds, then a representative payee may be named by the Social Security Administration to accept and use the funds on behalf of the child or the adult person.

For more information regarding representative payee, please refer to this website:
http://www.ssa.gov/pubs/10076.html


EXECUTOR/ADMINSTRATOR (Estate Account)
Account: An Estate Account
This account type is used when an executor or administrator is appointed to control and disburse a decedent's Estate. The court confirms the appointment by issuing legal documents appointing the Executor and listing specific instructions that the appointee must follow.

An estate account is established to enable the executor to settle and disburse the funds of the deceased individual prior to final distribution of the estate. The assets are used for paying debts of the deceased, paying estate cost, handling final payments to the decease and final is disbursement to the estate beneficiaries.

For more information regarding Executor/Administrator, refer to the following websites:
http://www.courts.ca.gov/8865.htm
http://www.irs.gov/publications/p559/ar02.html


QUESTIONS?

Please see a representative at your nearest Member Service Center.

 


This is for informational purposes only and should not be relied on as legal advice.