A fiduciary duty is a duty to act in the best interest of another person. A corporate board member on a board of directors owes a fiduciary duty to the company and the owners thereof. A partner owes such a duty to other the partnership and other partners. An executor owes such a duty to the Estate the beneficiaries thereof. A majority shareholder owes such a duty to a minority shareholder. Fiduciary duty can arise in surprising and not easily recognized situations. These duties can be formed or come into existence in different situations. The duty may be owed many persons some of whom have conflicting interest.
The fiduciary obligation may arise when there is a relationship with another person and there is a special trust, or a reliance thereon . Other examples are: an attorney has such a duty to a client. A general manager of a business owes such a duty to the owner of the business. A tax preparer owes such a duty to the taxpayer. A family member acting under authority of or as a co-signor of a bank account or an agent uner a power of attorney as such a duty.
Fiduciary duty has multiple aspects including Duty of honesty, Duty of fairness, Duty of Full Disclosure, Duty of Impartiality, Duty to act in good faith, Duty to Account. The law requires the fiduciary to act act in a manner that is not contrary to the interests of the person to whom teh duty is owed. The beneficary of the duty is entitled to the best efforts of the fiduciary and loyality of the fiduciary, who must also use the skill, care and diligence necessary. A person acting in a fiduciary capacity is held to a high standard of honesty and full disclosure. the fiduciacy is not to act in a manner that seeks his/her personal benefit, or to the detriment of the benficiary of the duty.
Someone hurt by the failure of a fiduciary may be entitled to damages. Courts have several ways of fixing breaches. Injured parties may receive compensation, including either money or punitive damages. Every case is different, and damages may hinge on the nature of the abuse, the fiduciary relationship, and other factors specific to the case. Here are a few of the penalties a court could impose:
- Removal of the fiduciary – The fiduciary could be removed from office.
- Punitive – If a breach is deliberate or intentional, a fiduciary to pay punitive damages.
- Denial of fees – A fiduciary may be denied fees for services.
- Penalty – A fiduciary may have to pay a monitary penalty or statutory fine.