What Does It Mean to be a Fiduciary? A Guide for Executors, Trustees, and Personal Representatives
At Atkins Law Offices, we often assist families and individuals in smoothly transitioning and administering assets when someone has passed away or become incapacitated. As part of this process, we frequently explain the roles, responsibilities, and legal duties of those nominated to step into key positions, such as an executor, trustee, or personal representative.
One of the most important concepts these individuals need to grasp is the concept of being a "fiduciary." This may be an unfamiliar term for many people, but it carries serious obligations.
What is a Fiduciary?
A fiduciary is an individual or institution that manages assets or property on behalf of another person (called the "beneficiary"). A fiduciary has a legal and ethical duty to always act in the best interests of the beneficiary, even if those interests conflict with the fiduciary's own personal desires.
Executors, Personal Representatives, and Trustees are Fiduciaries
· Executor: This person is named in a will and is responsible for wrapping up a deceased individual's affairs. This includes tasks like paying debts, filing tax returns, and distributing remaining assets to the intended beneficiaries of the will.
· Personal Representative: Some states use this term interchangeably with "executor."
· Trustee: This person is responsible for managing the property held in a trust. Trusts can provide ongoing support for beneficiaries and can be created during life or upon one's death.
Key Fiduciary Duties
Fiduciaries have a wide range of duties. Some of the most important include:
· Duty of Loyalty: Put the beneficiary's interests first at all times. Avoid any activities or situations that could create a conflict of interest.
· Duty of Care: Manage the beneficiary's money and property prudently, as if it were your own. Avoid excessive risk-taking.
· Duty of Impartiality: If there are multiple beneficiaries, treat them all fairly unless there are specific instructions to do otherwise.
· Duty to Account: Maintain detailed records of all transactions affecting the property and be prepared to provide these records to the beneficiaries or legal authorities.
What Happens if a Fiduciary Breaches Their Duties?
Breaching a fiduciary duty is a serious matter. Beneficiaries may take legal action against a fiduciary who acts in bad faith, misuses the assets, or fails to act in a prudent manner. A court could remove the fiduciary and possibly require them to compensate the beneficiary for any losses they have incurred.
Legal Support is Crucial
The role of a fiduciary carries significant responsibility. Here at Atkins Law Offices, we understand the legal complexities and potential pitfalls, and we're here to guide you. If you have been appointed as an executor, personal representative, or trustee, please contact us for personalized legal support.
Disclaimer: This blog post provides general information only. It does not constitute legal advice.