Today, we use “fiduciary” as a noun, meaning a trustee, a word most of us are familiar with. Fiduciary is also an adjective, referring to a relationship of trust and good faith between the fiduciary and the person for whom the fiduciary acts.
A fiduciary assumes responsibility for the affairs of another person (usually called the principal, ward or beneficiary).
There are three important duties that are required of a fiduciary:
• The Duty of Care is the responsibility to make decisions in good faith and in a reasonably prudent manner.
• The Duty of Good Faith requires the fiduciary not to act in a fraudulent or deceitful way or to the detriment of the person.
• The Duty of Loyalty means acting only for the benefit and of the person without any self-interest or economic conflict.
In summary, a fiduciary has legal and ethical obligations to act in the best interest of the person in all situations and to put those interests before his or her own.
What we don’t often realize is that this word applies to various types of professional relationships in our lives, such as:
• trustee and beneficiaries
• estate executor and heirs
• guardianship or conservatorship and ward
• attorney and client
• doctor and patient
• directors of corporations and shareholders
• real estate agents and buyers or sellers
• financial advisors and clients
Fiduciaries may perform many roles for you during your life and after your passing.
While choosing a fiduciary for your medical, financial and estate planning needs may not be easy, finding the right fiduciary should provide peace of mind that your interests are looked after in a responsible manner.