What is fiduciary?
Fiduciary is someone who acts for and on behalf of another person or entity, to which he/she is bound by a relationship of trust and confidence. Most commonly encountered as “fiduciary duty”, a legal term which describes the expectation that the Fiduciary (person/entity) is extremely loyal to the best interests of the person/entity to whom the duty is owed.
What types of fiduciary relationships are there?
Fiduciary in real estate – whereby a real estate agent or broker represents a buyer or a seller in a transaction, he/she acts as fiduciary and must seek the client’s best interests, as well as keep confidentiality and respect the client’s privacy. The National Association of Realtors lists loyalty, confidentiality, disclosure, obedience, accounting, reasonable care and diligence as a Realtor’s fiduciary duties.
Trustee and Beneficiary – whereby the trust or estate trustee is the fiduciary and the beneficiary is the Principal. The fiduciary has legal ownership over the assets of the beneficiary and has a fiduciary duty to manage these assets in the best interest of the beneficiary.
Board member and Shareholder – whereby board members can be considered trustees of the shareholders’ investments. The board members’ fiduciary duties include duty of care in making decisions that affect the future of the company, the duty to act in good faith and make choices that best serve the interests of the business and the shareholders and the duty of loyalty, which presumes that board members will not put their self-interests before those of the business they manage and of the shareholders that have invested in it
Attorney and Client – stated by the U.S. supreme court to be the fiduciary relationship of highest level of trust and confidence, whereby the attorney acts as fiduciary or be held accountable by the client.
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