Being appointed as a Trustee or indeed executor, deputy or attorney creates a fiduciary role under common law which gives rise to a relationship of trust and confidence. Fiduciary duties are in addition to a trustees duties, all trustees are fiduciaries but not all fiduciaries are trustees. There is an ethical and legal responsibility to the client, a relationship that requires trust and prudence on the part of the fiduciary. A fiduciary has a duty to act in a way that best meets their clients' needs.
One of the most common examples of a fiduciary duty is that which a trustee performs under a trust. A trust may be created during a settlors lifetime or by Will after death, it may be set up for a number of reasons such as to protect assets for future generations.
When a trust is created trustees are given the right to hold property or assets, the legal title to which passes to them to be held for the beneficiary. A trustee must administer the trust solely in the interest of the beneficiary, acting prudently, impartially and objectively. They must also keep the beneficiary informed and account to them.
Breaching Fiduciary Duties
Trustees are personally liable for a breach of their fiduciary duties. A trustee remains liable for any decisions taken whilst acting in that capacity, even after retirement. A breach of fiduciary duty can occur in several ways, including failing to disclose important information or profiting from a transaction involving trust property. The result of the breach is that the beneficiary is deprived of a benefit that is rightfully theirs or suffers a loss of an intended benefit.
Originally published by Anthony Gold, August 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.