Anyone who is planning to write a will, save money or invest resources needs to learn about fiduciary duty. Estate planning in California typically includes choosing a trusted individual or company to represent you or someone you love, and this individual becomes a fiduciary. You may want to learn more about the importance of fiduciary duty in estate planning.
What role does a fiduciary play?
A fiduciary is a person of trust who handles the money and possessions of another person. Anyone who the estate owner chooses can assume this role. A corporate trust company can become the fiduciary to a corporation that has transferred funds into its care. However, since it is such a significant legal and ethical responsibility, some state laws restrict certain people and businesses from becoming fiduciaries.
What a fiduciary duty entails
A fiduciary duty is a major legal and ethical responsibility that involves acting in the best interest of the person who has entrusted finances and assets. The three main responsibilities include duty of care, duty of loyalty and duty of obedience, which are governed by state law.
Cases of trust or estate litigation and claims of negligence can occur when this duty is disobeyed. Fiduciary negligence is when a fiduciary fails to act in the best interest of the other person. It is a form of professional malpractice that may result in a civil lawsuit against the person who breached the duty.
Planning an estate with a fiduciary
There are important steps to take when designing and executing an estate plan. Along the way, you should choose a trusted individual to handle your estate. The fiduciary must understand the legal procedures and paperwork required and, most importantly, vow to fully support your interests.