A fiduciary duty refers to a special legal relationship which is imposed by the law. Ordinarily, individuals do not owe heightened legal responsibilities to other individuals; the stranger on the street owes no special duty to the other stranger on the street. If, however, those strangers owed each other a fiduciary duty, then there could be an affirmative duty to act, use heightened care, be loyal, etc. Examples of fiduciary relationships include employer-employee, parent-child, attorney-client, accountant-client, physician-patient, director-shareholder, trustee-beneficiary, etc.
Using the foregoing in the trustee-beneficiary example, a trustee typically manages property which is held in trust for the benefit of the beneficiary. The trustee must keep a detailed accounting of all trust assets, must prudently invest ant maintain a profit for the assets, and must always work in the beneficiary’s best interests. Breach of these responsibilities can be quite serious and can result in extensive litigation. The law imposes a great number of obligations upon a fiduciary because fiduciaries occupy a position of trust — and thus breach of these obligations can come with severe sanctions.
Accordingly, , it is vital that anyone in a fiduciary relationship be fully apprised of the expectations and pertinent legal parameters. If you feel that there is a question about a possible breach of fiduciary duty, or just have a general question, do not hesitate to contact us.