In the intricate world of estate planning and wealth management, the role of a fiduciary stands as a cornerstone of trust and responsibility. A fiduciary is a personal representative appointed by a principal to act on behalf of the principal when they are no longer alive or capable. The principal or owner of the estate worked diligently to build their wealth and preserve their legacy. They did this to protect and continue to provide for their loved ones.
As a beneficiary, it is essential to comprehend the obligations and commitments of those entrusted with managing your interests. A fiduciary is in a position of trust, meaning they have access to the decedent’s finances. They can make investments and financial transactions for the estate because they have the authority to manage the estate assets. Their position can influence and affect your designated share of the estate.
Understanding the duties of a fiduciary
The fiduciary, a role often embodied by trustees, executors and estate administrators, is bound by law to act in the best interests of the estate and its beneficiaries, with integrity and utmost good faith. Therefore, the fiduciary must never use estate assets in a way that goes against the best interests of the beneficiaries.
The rules and moral standards for looking after beneficiaries’ interests involve obligations of disclosure, confidentiality and prudence. They must be able to present a thorough accounting of all the transactions they have made for the benefit of the estate. But, more than anything, they have a duty of loyalty and care to the estate and its beneficiaries.
A fiduciary cannot do whatever they want with the estate assets. Even if they have the financial experience and expertise, they must not use it for their own benefit or self-interest. Otherwise, that is a breach of fiduciary duty.
What can beneficiaries do if the fiduciary breaches their duties?
The beneficiaries can file a petition to remove the fiduciary from their position of trust and replace them with another individual or entity. They may also receive compensation from the fiduciary for any damages or financial losses they suffered because of the fiduciary’s deceptive or reckless actions.
For beneficiaries, the loss of a loved one is hard enough. A fiduciary should respect the trust bestowed upon them and never use it to rob beneficiaries of their fair share.