A fiduciary duty requires one to prioritize the needs of another.
You have heard the term “fiduciary duty.”
Perhaps you heard it in conjunction with your investments or your estate plan.
You do not know what it means.
According to a recent Forbes article titled “What Is Fiduciary Duty?,” you are not alone.
Those bound to a fiduciary duty must work in the best interests of the client rather than themselves.
The professional is known as the “fiduciary”.
The person receiving the service is known as the “principal” or the “beneficiary”.
Those fiduciaries who fail to serve the principal are in “breach” of their fiduciary duty
What duties to fiduciaries owe to their principals?
Fiduciaries have a duty of loyalty and a duty of care.
These are the foundational duties.
Certain professional fields and states have their own fiduciary requirements.
Those with fiduciary duties must not leverage their position for personal gain.
The professionals must disclose personal or economic conflicts of interest to those they serve.
What are types of professionals are fiduciaries?
They include trustees, executors, attorneys, and some financial advisors.
Trustees, executors, and attorneys must serve the needs of those making their estate plans and their beneficiaries.
Financial advisors bound by fiduciary duties must offer the best solution to the financial needs of their clients.
Reference: Forbes (July 28, 2020) “What Is Fiduciary Duty?”