Common kinds of fiduciary duty
It is common when drawing up estate plans to name someone to take care of and oversee these plans in order to ensure that the testator’s wishes are explicitly followed. This person is usually known as an executor, depending on the types of estate plan documents that have been developed. Once named, the executor has a fiduciary duty to always act in the best interests of the testator. Fiduciary duty can vary depending on the estate plan, so here are two everyday examples of fiduciary duty regarding certain estate planning documents.
When a trust is part of an estate plan, the person named in the document to oversee the trust is known as a trustee. The trustee must act in a fiduciary manner to the beneficiary of the trust, also known as the principal. The trustee owns all of the legal rights of the trust and can make all legal financial decisions regarding the trust. However, the trustee must always act in the best interests of the principal. Any financial decision about the trust that does not reflect this would not be allowed.
Estate plans can also name an individual to act as a guardian for a minor, usually referred to as a ward. The guardian has a fiduciary duty to the ward and must make sure that they are properly cared for. This means that the guardian must take care of the ward’s everyday needs including their education and any medical condition that they may have. This relationship must continue until the ward reaches the age of majority.
Naming the right executor to an estate plan usually requires careful consideration. However, any Florida resident who is considering naming an executor for their estate may want to speak to an estate planning attorney in order to better understand the duties that an executor must carry out.
Source: investopedia.com, “What are some examples of fiduciary duty?,” Accessed Dec. 22, 2015