What you should know about fiduciary duties

| Nov 13, 2019 | Estate Planning

Fiduciary duty is something people may not think about until they are in a stressful, upsetting position. Often, the subject arises after someone becomes very ill or passes away. Under these circumstances, it can be very difficult to know what to do, and perhaps more importantly, what not to do.

However, knowing what to do and not do will be critical for someone with a fiduciary duty.  

What is fiduciary duty?

Fiduciary duty exists when someone has the authority to make financial decisions on behalf of someone else.

For example, they may have the right to:

  • Buy or sell property
  • Pay medical expenses for a ward or agent
  • Hire investment professionals
  • Access bank accounts
  • Distribute assets

These and other actions can have a dramatic impact on others.

Who has this duty?

When it comes to estate planning, a guardian, personal representative and someone with power of attorney could all be in a position to control financial decisions affecting others. Fiduciaries could be someone with whom you have a personal relationship, like a parent or spouse, that you or the courts appoint. It could also be someone you hire, like a financial professional or attorney.

Making wise choices, preventing breaches

Whether you are creating an estate plan, or you will have a fiduciary duty for someone else, it is important that you think carefully about the ramifications of your decisions.

When naming or hiring a fiduciary, be sure the person is trustworthy and capable of acting lawfully and responsibly. If you have a fiduciary duty to someone else, be sure you act in that person’s best interests and do not attempt to take advantage of your position. These decisions can minimize the risk of legal disputes and costly mistakes.