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Shillington, Pennsylvania Family Law and Estate Planning Blog

What does it mean to be a fiduciary? 2018

Posted by Rob Levengood | Aug 18, 2018 | 0 Comments

Creating an estate plan involves becoming informed about all the various terms and what they mean. One term that trips up many individuals is “fiduciary.”

Basically, a fiduciary is a person who has accepted the role of taking care of someone else's money and assets. It is a position that requires a great deal of trust and confidence. Although many people use the terms “fiduciary” and “financial advisor” interchangeably, it is critical to remain aware of the differences. This will allow people to make decisions in their own best interest. 

Differences between a financial advisor and fiduciary

A fiduciary is someone who must work for a person's best interest. Financial advisors do not have to abide by the same standard. Therefore, a financial advisor can give a client financial advice regarding what stocks to buy even if such stocks are incredibly risky. Some advisors may advertise that they work within a fiduciary standard, but ultimately, it comes down to the person assigning the role to someone he or she trusts absolutely. 

What are examples of fiduciary relationships?

In the 21st century, the most common relationship that received fiduciary care is the one between a beneficiary and trustee. In this circumstance, the beneficiary has no legal right to access funds within the trust. The trustee owns the property and must administer it to the degree to which it benefits the beneficiary. Other types of relationships that generally require fiduciary care include:

  • Buyer client and buyer agent
  • Legal guardian and conservator
  • Stock subscriber and promoter
  • Company and board of directors

Duties of a fiduciary

In some cases, a fiduciary may need to file a surety bond with a judge or probate court. This document guarantees the individual will perform faithful duties to work in the best interest of someone else. Part of this may entail creating a detailed inventory of all assets held by the beneficiary. 

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Rob Levengood



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