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)

References in periodicals archive ?
Sarah Worthington, "Fiduciary Duties and Proprietary Remedies: Addressing the Failure of Equitable Formulae" (2013) 72:3 Cambridge LJ 720.
Rotman, Purdy Crawford Chair in Business Law and Professor, Schulich School of Law Dalhousie University.--Some of the theory and principles discussed in this article are influenced by or adapted from material first published or conceptualized in Mark R Gillen & Faye Woodman, eds, The Law of Trusts: A Conceptual Approach, 3rd ed (Toronto: Emond, 2015) 769; Leonard I Rotman, "Fiduciary Law's 'Holy Grail': Reconciling Theory and Practice in Fiduciary Jurisprudence" (2011) 91:3 BUL Rev 921; Leonard I Rotman, "Is Fiduciary Law Efficient?
(2) Despite being understood as the first case to express fiduciary principles in English law, Keech was not the first fiduciary law case decided in England.
Statement 84 culminates the transformation of the reporting requirements for governments' fiduciary relationships and responsibilities that began with GASB Statement 34, Basic Financial Statements--and Management's Discussion and Analysis--for State crnd Local Governments.
During the due process procedure for another standard, GASB recognized that the then-current guidance for reporting fiduciary relationships was likely inadequate to ensure consistent application.
Statement 34 established the current framework of state and local government financial reporting and began to address issues related to identifying and reporting fiduciary activities.
Rockford Products, in which the District Court concluded that “allowing a fiduciary to be liable for failing to correct a breach by prior fiduciaries would destroy the protection of ERISA Section 1109(b).”
Takeaway: Nothing new in Feinberg but a reminder that a new fiduciary does not have “a hall pass” with respect to prior conduct of his predecessor that was a breach of fiduciary duty.
(13) That kind of liability depends in part upon participation in a breach of trust or fiduciary duty, not participation in a breach of any other kind of duty.
The question, 'who owes fiduciary duties?' is a difficult question, and it is one which requires us to have an answer to the question, 'what is a fiduciary relationship?' And, 1 will argue, when we have an answer to that question, it helps us to know not only who owes fiduciary duties, but also what are fiduciary duties.
Also, as I read it, the new relief may not apply where the advisor/broker-dealer was already acting as a functional fiduciary prior to June 9," which is when the rule's Impartial Conduct Standards became effective.
Check out DOL Releases Fiduciary Rule FAQ for Investors, Workers on ThinkAdvisor.