What is a “Fiduciary:” General Considerations.
A “fiduciary” as a person to whom property or power is entrusted for the benefit of another.
The dictionary defines a “fiduciary” as a person to whom property or power is entrusted for the benefit of another. While our focus in this series will be on the individual fiduciary, it should be noted that a fiduciary may also be an entity, such as a Bank or Trust Company. The fiduciary relationship is based on and is in the nature of trust and confidence. Stated another way; a fiduciary is a person who owes to another the duties of loyalty, good faith and trust. A fiduciary relationship embodies the highest legal duty of one party to another. It also involves being bound ethically to act in the other's best interests. A fiduciary might be responsible for general well-being, but often it involves finances – managing the assets of another person, or of a group of people.
If you choose to name an individual as your fiduciary, there are three possible roles he or she might fulfill as part of your Estate Plan: an Executor, a Trustee or a Guardian. These are roles which involve the management of your property and even the care and custody of your minor children. A fiduciary is named to serve by Court Order, in the case of a Guardian, or by you in your Will or the trust agreement, in the case of an Executor or Trustee. Each must qualify for the role which he or she is selected, and all are ultimately subject to the supervision of a Court. A fiduciary cannot ignore the beneficiary of a Will or trust, nor may he or she neglect the child charged to his or her care. Because great weight is given your choice of fiduciary and great responsibility is placed upon the fiduciary’s shoulders, great care should be exercised when you nominate an individual to serve in a fiduciary role. In light of all this, it has been my experience that the most difficult decision involved in the preparation of your Estate Plan is the selection of a fiduciary.