As far as Estate Planning and the Probate context, if you have been named to manage money or property for someone else, as an Agent under some type of Power of Attorney or as a Personal Representative or Executor under a Will or as a Trustee of a Trust, you are a fiduciary. The law requires you to manage the money and property of your principal, deceased testator, or trustor for their or the beneficiaries’ benefit, not yours. Specifically, a fiduciary duty is a duty to act in the interest of another individual with respect to certain transactions, even above one’s own interest. A fiduciary is obligated to act in good faith and to act with care and loyalty toward those to whom they owe fiduciary duties. Fiduciaries are those who volunteer to perform certain duties or tasks for another. It is voluntary since no one can be forced to serve others or be a fiduciary. Even if named, listed, or nominated under a Will, power of attorney, etc., one does NOT have to serve. If you don’t want to serve as such, then you can decline. Fiduciaries are entitled to reasonable compensation and reimbursement of costs expended unless the document states otherwise.
A breach of fiduciary duty occurs when an agent, etc., fails to act responsibly in the best interests of a principal or beneficiary.
Usually, a breach of a fiduciary duty is classified as an intentional tort. As such, only civil claims can be brought under this cause of action. Depending on the grievances or violations committed, such a fiduciary may also be subject to criminal charges because of their breach.
It does not matter if you are managing a significant sum of money or a small amount. It does not matter if you are a family member or not. The role of a fiduciary carries legal responsibilities. When you act as a fiduciary, there are at least four basic duties that you must keep in mind:
1. Act only in your principal’s or beneficiary’s best interests;
2. Manage money, assets, and property carefully;
3. Keep the subject money, assets and property separate from yours; and
4. Keep good records.
However, even if there is a loss, if the fiduciary acted prudently, he or she may not have breached their duty.
As a fiduciary, you must be trustworthy, honest, and act in good faith. If you do not meet these standards, you could be removed as a fiduciary, sued, or must repay money. It is even possible that law enforcement could investigate you, and you might face criminal sanctions.
COSEQUENTLY, if you are to become a fiduciary as stated above or are in fact one, it is paramount to realize and acknowledge that it’s not your money, property, or assets, and you must act in the best interests of others! If you have any questions regarding a fiduciary’s duties, please call the law office of CASERTA & SPIRITI to discuss your situation and concerns about ensuring that the fiduciary understands and has the tools to fulfill or comply with the obligations as such.