Fiduciary comes from Latin fiducia, meaning "trust." A fiduciary duty is defined as a legal duty to act in another party's best interests. The parties that owe this duty are called fiduciaries and the parties in which the duties are owed are called principals. A fiduciary may not profit from their relationship with their principals unless they have received the principal's express informed consent. Fiduciaries also have a duty to avoid anything that would be perceived as a conflict of interest between themselves and their principals. Fiduciaries have the strictest duty of care that is recognized by the U.S. legal system.
Fiduciary relationships can be found in many legal contexts: contracts, wills and trusts etc. While the most common fiduciary is a trustee of a trust, fiduciaries can also include business advisors, attorneys, guardians of estates, and administrators or executors of estates to name a few.
Characteristically, a fiduciary has greater knowledge and expertise in the matters of which they have been entrusted. Fiduciaries are held to a standard of conduct and trust above that of a stranger or casual business person. Fiduciaries must avoid any sort of "self dealing" or "conflicts of interests" in the execution of their duties. For example, a trustee cannot comingle trust funds with their own to pay their own mortgage, nor can they treat beneficiaries unequally or favor one over the other for personal reasons.
By their very nature, fiduciary relationships require that the fiduciary act in the best interests of the principals, which for estate law reasons are the beneficiaries of an estate or a trust. A fiduciary must act in the best interests of the beneficiaries, free of any sort of self-dealing, conflicts of interests or other abuses of power for personal advantage.
A breach of fiduciary duty can be easier to prove than something such as fraud. The beneficiary doesn't need to prove criminal or fraudulent intent or other elements of fraud. To prevail, the beneficiary must be able to show that the fiduciary occupied a position of trust (executor, administrator, and trustee) and breached that duty so that he or she could benefit personally.
Executors, administrators and trustees are given a large responsibility and significant power and authority over a trust or an estate. When a fiduciary acts carelessly, recklessly or unethically, they can be held responsible for any resulting loss to the principals or for significant harm done to the estate.
To learn more about the fiduciary duties of an executor or trustee, and the legal remedies available when personal representatives breach their fiduciary duty, please contact me at the Law Offices of Timothy D. Henry to schedule a free consultation. I can be reached at (408) 643-0942.