As a geropsychologist and neuropsychologist, a significant part of my work involves assessing an individual's capacity to make decisions – particularly as they age. This isn't just about whether someone remembers what they had for breakfast; it's a complex evaluation of their cognitive abilities, understanding of consequences, and ability to act on their own behalf. And often, when we talk about capacity, especially in financial or legal matters, a crucial term comes up: fiduciary.
Today, in Part 1 of our "Concepts in Capacity" series, we're going to demystify what a fiduciary is, why this role is so vital, and why understanding it is paramount for older adults and their families.
What Exactly Is a Fiduciary?
At its core, a fiduciary is a person or entity that acts on behalf of another person (the "principal") in a position of trust and confidence. The fiduciary is legally and ethically bound to act solely in the best interest of the principal. This is not a casual relationship; it's one that carries significant legal duties and responsibilities.
Think of it this way: if someone is acting as your fiduciary, their own personal interests, preferences, or financial gain must always take a back seat to yours. Their duty is to protect your assets, make sound decisions for your well-being, and manage affairs exactly as you would, or as is demonstrably in your best interest if your capacity is diminished.
Common Examples of Fiduciary Relationships
You might already be more familiar with fiduciary roles than you realize. Here are some common examples relevant to older adults:
Agent under a Power of Attorney:
This is perhaps the most common fiduciary role for many families. If you've appointed someone with a Durable Power of Attorney for finances or healthcare, that person is your fiduciary. They are legally obligated to manage your money or make healthcare decisions according to your wishes and in your best interest.
Trustee:
If you've set up a trust, the person or institution named as the trustee is a fiduciary. They manage the assets within the trust for the benefit of the beneficiaries, following the terms of the trust document.
Guardian or Conservator:
When a court determines an individual lacks the capacity to make their own decisions, it may appoint a guardian (for personal decisions like healthcare and living arrangements) or a conservator (for financial decisions). These appointed individuals are fiduciaries with a very high legal duty to the protected person.
Executor of a Will:
The executor is responsible for carrying out the instructions in a deceased person's will, managing their estate, paying debts, and distributing assets. They act as a fiduciary to the estate and its beneficiaries.
Financial Advisor (specifically a "fiduciary advisor"):
While not all financial advisors are fiduciaries, those who are registered investment advisors (RIAs) or hold specific certifications (like Certified Financial Planner - CFP, under certain conditions) are legally required to act as fiduciaries, putting their client's interests first. This is a critical distinction to ask about when choosing a financial professional.
Why Is Understanding "Fiduciary" So Important for Older Adults and Their Families?
Protection Against Exploitation: Unfortunately, older adults are vulnerable to financial exploitation. A clear understanding of fiduciary duties can help families identify when someone in a position of trust is not acting in the principal's best interest. This can be a red flag for potential abuse.
Ensuring Wishes Are Honored: When you appoint someone as your agent in a Power of Attorney, you are entrusting them with significant power. Knowing they have a fiduciary duty means they are legally bound to follow your instructions and act as you would have wanted, particularly regarding healthcare and end-of-life decisions.
Peace of Mind: For older adults, knowing that the people managing their affairs or making decisions on their behalf are legally obligated to act in their best interest provides immense peace of mind.
Guiding Difficult Conversations: For adult children, understanding the fiduciary role can help guide discussions about managing a parent's affairs. It frames the conversation around responsibility and trust, rather than control or personal gain.
Legal Recourse: If a fiduciary breaches their duty (e.g., misuses funds, makes decisions against the principal's clear wishes without good reason, or benefits themselves at the principal's expense), there are legal avenues for recourse. This legal accountability is what gives the fiduciary relationship its weight.
The Interplay with Capacity
This brings us back to capacity. For a fiduciary relationship to be established properly (e.g., through a Power of Attorney), the principal must have the capacity to understand the document they are signing and the implications of granting such authority. If capacity is questioned, a court may need to step in to appoint a guardian or conservator, who then assumes the fiduciary role.
In the upcoming parts of this series, we will delve deeper into different facets of capacity – what it means clinically, how it's assessed, and the nuanced areas of decision-making that often arise as we age. But for today, remember this: the concept of a fiduciary is a cornerstone of trust and protection, especially for our aging loved ones. Understanding it is a vital first step in ensuring their well-being and honoring their legacy.
This blog series will cover several concepts important to understanding the issue of capacity. Stay tuned for Part 2!
Does Your Loved One Have the Capacity to Appoint a Fiduciary? Start with a Capacity Assessment in Los Angeles, CA
Before someone can legally designate a fiduciary—whether for financial decisions, healthcare, or estate planning—they must have the capacity to fully understand what that means. A capacity assessment in Los Angeles, CA provides the clinical insight needed to determine whether an individual can make informed, intentional choices about their future.
As a trusted neuropsychologist in Los Angeles, Dr. Stacy Reger offers compassionate, comprehensive evaluations that help families navigate complex legal and cognitive questions with confidence. Her assessments are designed to honor the individual while ensuring clarity for all involved. Take the next step:
Call (424) 262-1925 to schedule a private consultation
Meet with a licensed neuropsychologist for a detailed capacity evaluation
Make informed decisions grounded in expert assessment and genuine care
OTHER SERVICES OFFERED BY DR. REGER IN LOS ANGELES, CA
In her work as a neuropsychologist and geropsychologist, Dr. Stacy Reger offers a range of services designed to support sound decision-making, safeguard autonomy, and guide families through complex transitions. Her neuropsychological assessments help clarify diagnoses such as ADHD, dementia, and traumatic brain injury—conditions that can directly impact a person’s ability to manage finances, health care, or legal affairs.
In addition to capacity evaluations, Dr. Reger provides med-legal assessments, workers’ compensation evaluations, and pre-surgical screenings to support thoughtful, well-informed planning. She also offers individual therapy for older adults, focusing on the emotional and cognitive shifts that come with aging. Whether you're seeking guidance for a specific concern or planning ahead for a loved one’s care, Dr. Reger is available for consultations, presentations, and community education.
Visit Dr. Reger’s blog to learn more about capacity, fiduciary roles, and the tools that help families make decisions with confidence and care.