A Fiduciary’s Duties
Trustees and executors are those who are entrusted with managing the property of others for the benefit of the beneficiaries of the estate or trust. While many want to be the trustee or executor of an estate, the responsibilities and requirements of being a trustee can be significant. Fail to live up to these obligations and you may be personally liable for your mistakes to the beneficiaries of the estate or trust if your action, or failure to act, has cost the estate money.
Trustees and executors are referred to in legal lingo as “fiduciaries”. To be a fiduciary to another means putting the interest of the beneficiary(ies), at all times, ahead of the fiduciary’s interest. A fiduciary may never benefit over another beneficiary, even if the fiduciary is a beneficiary him or herself. Using a common set of facts, if a parent nominates a child to administer an estate dividing the estate amongst all the children, that child/fiduciary can do nothing to benefit him or herself to the detriment of a sibling (fellow beneficiary).
Trustees and executors duties typically include:
- Duty to administer trust or estate (e.g. take action to proceed through administration)
- Duty of loyalty to beneficiaries
- Duty to deal impartially with beneficiaries
- Duty to avoid conflict of interest
- Duty not to undertake position adverse to trust or estate
- Duty to take control of and preserve property
- Duty to insure property
- Duty to make estate or trust property productive
- Duty to keep property separate and identified
- Duty to enforce claims against estate or trust
- Duty to defend actions against estate or trust
- Duty, generally, not to delegate
- Duty to act in unanimity with co-executors or trustees
- Duty to use special skills
If a trustee or executor fails to meet these duties, then he or she may be subject to removal as a fiduciary and/or payment of any losses suffered due to the “breach of fiduciary duty”.
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