What is a fiduciary used for? This person or organization acts on your behalf to manage your finances. There are several situations that could call for the use of a fiduciary. In each scenario, the fiduciary’s responsibilities vary slightly. Following are some of the most common uses of a fiduciary and how this party should carry out their duties in each situation.
Fiduciary standards
In any situation, a fiduciary is held to certain standards when fulfilling their role as your financial manager or other type of caretaker. If you hire a fiduciary, it is important to understand these standards and hold the fiduciary to them.
First, they must use accurate and complete information when providing investment advice. Second, they must disclose any conflict of interest that arises. Third, they must clearly disclose any fees charged for their services. Lastly, they must avoid using client assets for their own benefit.
Fiduciary roles
One of the most common uses of a fiduciary is as a trustee. In these situations, the fiduciary manages the property in a trust. Other common fiduciary roles include:
- Financial advisor: A financial advisor assists you with your financial interests. They may sell investments or recommend methods of saving or investing to you. As a fiduciary, this party would be held to the high standards listed in the section above. This means they should advise you to make decisions that are in your best interest rather than theirs.
- Attorney: If you hire an attorney, he or she is required to act as a fiduciary. The attorney must be completely faithful and fair in all dealings with you. If they fail to do so, they will be held accountable by the courts.
- Executor: If you need assistance with a specific financial transaction, such as a real estate deal, you may ask an executor to act as your fiduciary. You would have minimal involvement with the transaction, and the executor would act on your behalf, in your best interests.
- Corporation: If you invest in a corporation, that entity has a financial responsibility to you as one of its stakeholders. You can expect the corporation to uphold its fiduciary responsibilities to you regarding any financial decisions that are made.
- Legal guardian: These fiduciaries have more than just financial responsibilities. As legal guardians, they are to ensure a minor is taken care of until the child becomes a legal-aged adult. The guardian must oversee day-to-day physical and mental care of the child, keeping the child’s best interests as the top priority.
- Health care agent: A health care agent acts as a fiduciary by making medical decisions for you. This may be necessary if you are unable to make decisions for yourself. This individual is charged with carrying out any written instructions you have provided regarding your treatment.
Find a fiduciary
If you need someone to act in your best interests, contact your local experts at Fiduciary Advisors, Ltd. We specialize in designing and planning employee retirement programs, pensions, profit sharing and more. Contact us today for more information or to get started. Reach our trusted advisors at 602-864-1012.