When you create an estate plan, part of the process involves selecting a number of people or organizations to act on your behalf. Whether you are choosing a trustee to manage your living trust, an attorney-in-fact to make medical or financial decisions for you, or an executor who will manage your estate, numerous people will be your fiduciaries. Here’s what you need to know about fiduciaries and fiduciary duties.
Legal responsibility
In everyone’s day-to-day life, you owe little to no duty to strangers. You have no legal obligation to treat them kindly, act in their interests, or place their interests or needs before yours.
But some people have duties that go far beyond the average requirements of strangers. A fiduciary is someone who is legally obligated to act for the benefit of someone else, a person known as a principal. The fiduciary duty is to do what is in the principal’s best interests, placing that person’s interests ahead of the fiduciary’s own interests.
Care and Loyalty
In the broadest sense, a fiduciary has a legal obligation to both be loyal to a principal and to act with care when managing principal’s interest. For example, it isn’t enough for a fiduciary to simply make a decision that he or she believes is in the principal’s best interests. Fiduciaries have to be reasonably certain that they are making a prudent decision. If, for example, you appoint someone as your estate executor, that person will have to make decisions about probate. To make a prudent and reasonable decision, a fiduciary in that situation will have to seek legal advice from an experienced probate attorney.
- How Estate Planning for a Family May Trap the Unwary Practitioner - August 31, 2022
- State Income Taxation of Social Security Benefits - August 24, 2022
- Understanding Tax Apportionment Clauses - August 17, 2022
