Fiduciary duties arise when one party relies on another party to act in their best interests. Some of the most common examples of this include financial advisors, trustees and business partners. These individuals all owe fiduciary duties to clients, organizations, or the beneficiaries of a trust.
Outlined below are the key elements of fiduciary duties.
1. Duty of loyalty
A fiduciary must act in good faith and avoid conflicts of interest. They should not use their position for personal profit (self-dealing) at the expense of beneficiaries. For example, a financial advisor must not take an investment fund and make private investments not in the best interests of their client.
2. Duty of care
Fiduciaries also have a duty to act responsibly. They must exercise due diligence, competence, and reasonable judgment. For instance, a business partner must conduct research and consult with partners before making an investment or other key decisions.
3. Duty of confidentiality
Fiduciaries must also exercise discretion. Sensitive information must not be disclosed to outside parties unless explicitly authorized.
4. Duty of good faith
Honesty is vital when it comes to fiduciaries. Good communication must be maintained with beneficiaries as their well-being should always be the priority.
Fiduciaries act in numerous areas such as banking, estate planning, corporate governance, and other professional services. Beneficiaries rely on fiduciaries to make decisions in their best interests. A breach of fiduciary duties can have devastating consequences, such as a significant loss of money or trust in the relationship. If a fiduciary has breached their duties toward you, then you do have options. Seek legal guidance promptly to explore potential remedies.
