**Fiduciary Duty** (noun) — The legal obligation of a fiduciary to act with the highest standard of care, loyalty, and good faith exclusively in the best interests of the person or entity to whom the duty is owed, subordinating personal interests and avoiding conflicts.
A fiduciary duty is the legal obligation to put someone else's interests ahead of your own. When you have a fiduciary duty to someone, you must act honestly, carefully, and loyally in managing their affairs. You can't use your position to benefit yourself at their expense, even in ways that might seem minor.
Fiduciary duties include several specific obligations. You must act with care and skill, making prudent decisions as a responsible person would. You must be loyal, avoiding conflicts of interest and never profiting from your position beyond authorized fees. You must act in good faith, being honest and transparent. You must keep accurate records and provide accountings. You must treat all beneficiaries impartially if serving multiple people.
These duties are enforceable. If a fiduciary breaches their duties, they can be removed from their position, required to pay back any improper gains, held liable for losses caused by their actions, and in serious cases, face criminal charges. Courts take fiduciary duties seriously because people in fiduciary relationships are often vulnerable and completely reliant on the fiduciary.
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Executors, trustees, and attorneys under powers of attorney all owe fiduciary duties. When someone appoints you to one of these roles, they're placing trust in you to manage their affairs properly. The fiduciary duty ensures this trust isn't misplaced by creating legal obligations that protect the person's interests.
Common breaches of fiduciary duty include using estate assets for personal benefit, making risky investments with trust funds, favoring some beneficiaries over others without justification, failing to keep proper records, hiding information from beneficiaries, or having conflicts of interest without proper disclosure and approval. Even honest mistakes can constitute breaches if they result from carelessness or lack of proper attention.
If you're appointed to a fiduciary role, take it seriously. Keep detailed records of everything you do, get professional advice when needed, communicate regularly with beneficiaries, avoid any conflicts of interest, and always ask yourself whether your actions serve the best interests of the person you're serving. When in doubt, seek legal guidance before proceeding.
**Related terms:** [Fiduciary](/dictionary/fiduciary), [Executor](/dictionary/executor), [Trustee](/dictionary/trustee)
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