Fiduciary duty refers to the legal obligation of one party to act in the best interests of another party. This duty is typically imposed on individuals or organizations that hold a position of trust, such as directors of a corporation, trustees of a trust, or financial advisors. Fiduciary duty requires that the party with the duty act with the highest level of care, loyalty, and good faith towards the party they are acting on behalf of. This means that they must prioritize the interests of the other party over their own and avoid conflicts of interest.
Fiduciary duty is an important concept in a variety of contexts, including corporate governance, estate planning, and financial planning. In the corporate context, directors and officers of a company owe a fiduciary duty to the company and its shareholders, and must act in the best interests of the company in all decisions and actions. In the context of estate planning, trustees of a trust owe a fiduciary duty to the beneficiaries of the trust, and must manage the trust assets in a way that is in the best interests of the beneficiaries. Similarly, financial advisors owe a fiduciary duty to their clients, and must act in the best interests of their clients when providing financial advice and managing their assets.
The bottom line, fiduciary duty is a legal obligation that requires those who hold positions of trust to act in the best interests of the parties they are acting on behalf of, and to avoid conflicts of interest. It is an important aspect of good governance and helps to promote trust, transparency, and fairness in a variety of contexts.
The duty of a fiduciary to a principle may include:
– undivided loyalty
– representing the interests of the principle in good faith
– acting without self-interest
– exercising care, due diligence and prudence
– protecting money and assets
– avoiding conflicts of interest
– promptly informing the principle of material information
– maintaining detailed records and accounts
– not to profit without the knowledge and consent of the principle