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.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.

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)

Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.
References in periodicals archive ?
La Forest at the Supreme Court of Canada, 1985-1997 (Winnipeg: Canadian Legal History Project for the Supreme Court of Canada Historical Society, 2000) 81 at 83-87; Sarah Worthington, "Fiduciary Duties and Proprietary Remedies: Addressing the Failure of Equitable Formulae" (2013) 72:3 Cambridge LJ 720 at 720.
To demonstrate the importance of fiduciary duties in personal finance, Rostad cited a 2008 RAND Corporation paper titled "Investor and Industry Perspectives on Investment Advisors and Broker-Dealers," which found that nearly two out of three (63%) focus-group participants "believed that brokers are required by law to act in the client's best interest." What's more, after having the differences explained to them, "investors are often unable to tell whether their own financial professional is a broker or an advisor."
When that happens, creditors often look for other ways to recover what they are owed and lawsuits for breaches of fiduciary duties is one avenue they may pursue.
that officers have the same fiduciary duties as directors.
Moreover, to the extent fiduciary relationships are contractual, and fiduciary duties are default terms, they provide poor guides to public law.
Lufkin formed the committee after certain shareholders accused the board of having violated its fiduciary duties in approving the deal with GE and called on the board to take steps to remedy its conduct.
practice implicates fiduciary duties at the precertification stage.
Dial, the Seventh Circuit ruled that trading ahead is a fraud under the mail and wire fraud statutes (86) because it is a failure "to 'level' with one to whom one owes fiduciary duties." (87) In that case, broker Donald Dial, the defendant, solicited a large order for silver futures from his customers, but before he put that order on the market he put in an order for himself (and his brokerage house).
Villanueva said that all corporations, acting through their BOD, 'should be devoted toward a single objective of maximizing the profits of the corporation for the benefit of its stockholders.' Villanueva added that the Corporation Code, which grants directors with legal title to the corporate assets for the benefit of stockholders, serves as 'the legal bedrock for the prevalence of the Doctrine of Maximization of Shareholders' Value in Corporate Governance.' Profit maximization appears to be the ultimate measure whether the BOD fulfilled its fiduciary duties with the underlying dictates of corporate governance.
To repeat, Australian orthodoxy is that fiduciary duties are only proscriptive, and never prescriptive.
These instructions have been prepared to cover many of the circumstances under which fiduciary duties have been held to arise.