The word “fiduciary” comes from the Latin fiducia, which means “faith” or “trust.” Typically, a fiduciary prudently takes care of money for another person. The party who places confidence or trust in the fiduciary is known as the “principal.” In a fiduciary relationship, the principal justifiably vests confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter.
A fiduciary relationship is defined as a legal or ethical relationship of confidence or trust regarding the management of money or property between two or more parties. A fiduciary relationship can extend to many relationships in which one side places confidence in the other and such confidence is accepted. Trustees, guardians, attorneys in fact under powers of attorney, caregivers, and personal representatives are examples of fiduciaries. Other individuals with fiduciary responsibilities include bankers, investment advisors and fund managers, real estate agents, attorneys, and corporate officers.
A fiduciary owes a duty of loyalty, care, and full disclosure to the principal (the person(s) he or she represents). A fiduciary is held to a standard of conduct and trust above that of a stranger or of a casual business person, and must avoid situations in which the potential benefit to the fiduciary is in conflict with what is best for the principal. A fiduciary duty is the strictest duty of care recognized by the U.S. legal system.
Robin H. Balsam P.S. assists clients who are acting or have been appointed as fiduciaries with general advice as to their responsibilities, all aspects of required reporting and accounting, and resolution—whether cooperative or litigation-based—of disputes between fiduciaries and principals.