fiduciary


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Fiduciary

An individual in whom another has placed the utmost trust and confidence to manage and protect property or money. The relationship wherein one person has an obligation to act for another's benefit.

A fiduciary relationship encompasses the idea of faith and confidence and is generally established only when the confidence given by one person is actually accepted by the other person. Mere respect for another individual's judgment or general trust in his or her character is ordinarily insufficient for the creation of a fiduciary relationship. The duties of a fiduciary include loyalty and reasonable care of the assets within custody. All of the fiduciary's actions are performed for the advantage of the beneficiary.

Courts have neither defined the particular circumstances of fiduciary relationships nor set any limitations on circumstances from which such an alliance may arise. Certain relationships are, however, universally regarded as fiduciary. The term embraces legal relationships such as those between attorney and client, Broker and principal, principal and agent, trustee and beneficiary, and executors or administrators and the heirs of a decedent's estate.

A fiduciary relationship extends to every possible case in which one side places confidence in the other and such confidence is accepted; this causes dependence by the one individual and influence by the other. Blood relation alone does not automatically bring about a fiduciary relationship. A fiduciary relationship does not necessarily arise between parents and children or brothers and sisters.

The courts stringently examine transactions between people involved in fiduciary relationships toward one another. Particular scrutiny is placed upon any transaction by which a dominant individual obtains any advantage or profit at the expense of the party under his or her influence. Such transaction, in which Undue Influence of the fiduciary can be established, is void.

fiduciary

1) n. from the Latin fiducia, meaning "trust," a person (or a business like a bank or stock brokerage) who has the power and obligation to act for another (often called the beneficiary) under circumstances which require total trust, good faith and honesty. The most common is a trustee of a trust, but fiduciaries can include business advisers, attorneys, guardians, administrators of estates, real estate agents, bankers, stock brokers, title companies, or anyone who undertakes to assist someone who places complete confidence and trust in that person or company. Characteristically, the fiduciary has greater knowledge and expertise about the matters being handled. A fiduciary is held to a standard of conduct and trust above that of a stranger or of a casual business person. He/she/it must avoid "self-dealing" or "conflicts of interests" in which the potential benefit to the fiduciary is in conflict with what is best for the person who trusts him/her/it. For example, a stockbroker must consider the best investment for the client, and not buy or sell on the basis of what brings him/her the highest commission. While a fiduciary and the beneficiary may join together in a business venture or a purchase of property, the best interest of the beneficiary must be primary, and absolute candor is required of the fiduciary. 2) adj. defining a situation or relationship in which a person is acting as a fiduciary for another. (See: trust, fiduciary relationship)

fiduciary

adjective commanding belief, commanddng confidence, confidential, deserving belief, fiducial, founded in confidence, reliable, sound, trusted, worthy of belief, worthy of credence
Associated concepts: fiduciary bequest, fiduciary bond, fiduuiary capacity, fiduciary relation

fiduciary

noun agent, caretaker, custodian, guardian, one who handles property for another, one who transacts business for another, person entrusted with property of another, trustee
Associated concepts: escrow, trust
See also: executor, pecuniary, trustee
References in periodicals archive ?
Plan fiduciaries are expected to continue to retain 3(38) advisors who accept a delegation of fiduciary duties and to monitor plan cost, fund performance, fiduciary compliance, and plan governance.
Geller, JD, CPA, is the managing member of Stone Hill Fiduciary Management, LLC, Great Neck, N.
The lingering uncertainty surrounding the fiduciary concept has, however, led some to argue in favour of limiting the application of fiduciary principles (19) or even redefining the fiduciary concept altogether.
Numerous academics have attempted to address fiduciary uncertainty.
Rather than limiting the fiduciary concept's application or engaging in its fundamental redefinition, the problematic jurisprudential application of fiduciary principles demonstrates the need to fashion a more robust understanding of fiduciary law.
While there is likely to be more detail and sophistication in any specific fiduciary interaction than what is described above--particularly where the facts of an individual situation demand it--the above portrayal establishes the basic parameters of a finding of fiduciary obligation.
The mutability of fiduciary principles allows for their application to a wide variety of disparate fact situations and equally broad variety of interactions, but simultaneously renders the fiduciary concept inimical to precise definition.
A recommendation for the transfer or rollover of assets from a plan or IRA account to a different plan or IRA account is another form of fiduciary advice.
While the 2015 proposal provided that appraisals and financial valuations of securities would generally be viewed as fiduciary advice, the DOL's final rule excludes appraisals from the definition of investment advice.
For purposes of the final fiduciary definition, the DOL has clarified that an advisor's fiduciary services may be limited to one-time advice, provided that the advisor communicates that it will not have any ongoing monitoring responsibilities with respect to the recommended investment after its acquisition.
The new definition broadens the scope of what fiduciary investment advice is by eliminating the regular basis, mutual understanding and primary basis aspects of the old five-factor test.
The old fiduciary investment advice definition clearly covered investment recommendations, but it did not expressly apply to investment management recommendations.