You may have heard the term “fiduciary” used about the trustee of a trust or the job executor, administrator, or personal representative of an individual’s estate. Most people are unsure of what exactly a “fiduciary” is. Furthermore, because the term is based on hazy common-law conceptions of equity, it can be challenging to pinpoint a person’s fiduciary duty in a particular circumstance. Contacting an estate lawyer in Ridgeland
So what exactly is a “fiduciary”?
A fundamental concern has been addressed by the development of the fiduciary concept and the corresponding obligations: In many instances, we seek to stop people from abusing their discretionary authority to further their own interests at the expense of others. Fiduciary obligations are put in place to guard against the weaker party abusing the fiduciary relationship.
The first fiduciary responsibility
The dual responsibilities of the duty of care and the duty of loyalty are included in fiduciary duties. The fiduciary is obligated by the duty of loyalty to prioritize the requirements of the beneficiaries over its own interests. The fiduciary must refrain from using the relationship for personal gain. In addition to the restriction against self-dealing, the obligation to disclose important information and duties regarding conflicts of interest all stem from the duty of loyalty.
The second fiduciary responsibility,
Known as the “duty of care,” calls for fiduciaries to handle their affairs in a way that is knowledgeable, prudent, and consistent with how a typical, prudent person would manage their own affairs.
All fiduciaries must act with loyalty and care, including executors, administrators, trustees, and personal representatives. They must understand that they do not own the assets they hold; rather, they do so for the advantage of the beneficiaries.
When one of the recipients is also the fiduciary, the fiduciary’s obligations may become more challenging. In that scenario, Fiduciaries must ensure that they operate in the best interests of all the beneficiaries concerned, not just their own.
Practically, securing the agreement of all parties with a stake in the transaction can address many worries about fiduciary obligations. For instance, if a trustee must dispose of a trust asset, he can defend himself from accusations of breaching his fiduciary responsibility by fully disclosing the conditions and justifications of the sale to the beneficiaries and receiving their informed permission before the sale.
The fiduciary can lessen the chance of a claim of violation of fiduciary duty by getting the approval of all persons concerned.