**Fiduciary** (noun) — A person or entity in a position of trust who is legally and ethically bound to act in the best interests of another party, placing that party's interests ahead of their own and maintaining duties of loyalty, care, and good faith.
A fiduciary is someone who must put another person's interests ahead of their own because they've been given a position of trust and authority. If you're a fiduciary, you can't use your position for personal benefit at the expense of the person you're serving. You must be loyal, honest, and act with care.
Common examples of fiduciaries in estate planning include executors (who must act in the estate's best interests), trustees (who must manage trust assets for beneficiaries' benefit), and attorneys appointed under powers of attorney (who must act in the donor's best interests). These roles all involve handling someone else's affairs, money, or property.
Being a fiduciary is serious. You have legal obligations that can result in personal liability if you breach them. You must avoid conflicts of interest, keep accurate records, treat all beneficiaries fairly, make prudent decisions, and never profit from your position except for authorized fees. Courts hold fiduciaries to high standards because people rely on them completely.
⏱ When you'll encounter this term
When you appoint someone as your executor, attorney under power of attorney, or trustee, you're creating a fiduciary relationship. The person you appoint becomes your fiduciary, legally required to act in your best interests rather than their own. This protection is crucial because these roles involve significant power over your affairs.
Fiduciary duties include the duty of loyalty (putting the beneficiary's interests first), duty of care (acting prudently and competently), duty to account (keeping accurate records and reporting), duty of impartiality (treating all beneficiaries fairly), and duty to inform (keeping beneficiaries appropriately informed). Breaching these duties can result in the fiduciary being removed, being required to compensate for losses, or even facing criminal charges in serious cases.
Not everyone who helps with your affairs is a fiduciary. Your accountant or solicitor might provide advice, but they're not necessarily fiduciaries unless they take on specific roles like serving as executor or trustee. Understanding whether someone has fiduciary obligations helps you know what standards they must meet and what recourse you have if they act improperly.
**Related terms:** [Fiduciary Duty](/dictionary/fiduciary-duty), [Trustee](/dictionary/trustee), [Executor](/dictionary/executor)
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