A History Of Growing Trust In Kentucky

What is fiduciary duty?

On Behalf of | Jun 7, 2023 | business formation & planning, Estate planning

Fiduciary duty is the highest standard of civil duty a person can have to another. When a person is a fiduciary to a principal, then their actions must always be in the best interests of the other individual. If a fiduciary is not faithful to their duty, they can face a lawsuit.

Fiduciaries are an essential and important function for investors, businesses and people building their estate plans. It’s important to understand everything you can about them.

What are the specific duties of a fiduciary?

Primarily, a fiduciary has several main duties to each of his or her clients/beneficiaries. These duties include:

  • Loyalty
  • Good faith
  • Confidentiality

Primarily, this means that a fiduciary follows the wishes of those they have a duty to. They do it to the best of their ability. They keep their clients’ needs private and do not divulge information.

Who are fiduciaries?

Fiduciaries are often in positions of immense trust. This includes:

  • CEOs
  • Boards of directors
  • Executors
  • Financial advisors

Any instance where a person’s must place their total faith into the hands of another, it is wise to consider if that person is acting as a fiduciary. That isn’t to say anyone working in an investments is unreliable if not a fiduciary, but that person does not have the same level of incentive to treat you with the utmost care.

What extent are fiduciaries liable?

In any breach of contract or breach litigation a company can be held liable. However, often companies are crafted to secure the personal assets of their owners. However, Anyone acting as a fiduciary is personally liable to the principal. This means all of their assets – their other interests – are at risk if they breach their many duties.

It is the major incentive of trust between a person in their fiduciary.