What is a Fiduciary?

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Defined

 

Fiduciary:  From the Latin fiducia, meaning "trust," a person who has the power and obligation to act for another (often called the beneficiary or Conservatee) under circumstances which require total trust, good faith and honesty.  


The fiduciary is a person who holds a legal and ethical relationship of trust with one or more other parties. Typically, a fiduciary prudently takes care of money or other assets for another person or acts as Conservator of the person and/or Conservator of an estate.  


In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance, and trust in another whose aid, advice, or protection is sought in some matter.  In such a relation good conscience (and the law) require the fiduciary to act at all times for the sole benefit and interest of the one who trusts.


Fiduciary duties exist to ensure that those who manage other people’s affairs, money, or any deed for that matter, act in their beneficiaries' interests, rather than serving their own interests. 


A fiduciary duty is the highest standard of care in equity or law.  A fiduciary is expected to be extremely loyal to the person to whom he owes the duty (the principal) such that there must be no conflict of duty between fiduciary and principal, and the fiduciary must not profit from his position as a fiduciary unless the principal consents.  


When a fiduciary duty is involved, equity requires a different, stricter standard of behavior.  The distinguishing or overriding duty of a fiduciary is the obligation of undivided loyalty.