Conservators, trustees, personal representatives, all these roles that are common in estate administration have one striking similarity: their role places them in a position as a fiduciary. I have used this term in various posts, and have even mentioned the fact that they have important duties connected to their roles, but I have yet to take a moment to describe what those duties are. Whenever someone authorizes another to act in their stead, the authorizer becomes a principal and the authorized his agent. When the agent is acting pursuant to his authorization as an agent, he is said to have fiduciary duties governing his actions.
A fiduciary has two main duties: a duty of care and a duty of loyalty. Within these two main duties additional duties can be imposed. The essence of the duty of care is the requirement that a fiduciary perform with diligence and competence; to do their very best in their responsibilities. If a personal representative or trustee is found to have acted haphazardly in fulfilling their role, they can be held liable for monetary damages incurred by creditors, devisees, or other interested parties.
The duty of loyalty is not completely unrelated, but has more components. The duty of loyalty imposed on a fiduciary requires good faith from the fiduciary to act according to the principal’s best interests. It also includes a duty to not seek his own interests through his role as a fiduciary. This includes not using money from an estate to meet the personal representative’s personal needs, or a conservator taking money designated for a minor child to invest for his own personal gain. Probate administration is replete with principles of agency. Understanding the role of a fiduciary is important when considering who to designate as a personal representative for your estate, conservator for your child, or trustee for you testamentary trust.
Image by: Galt Museum