There are many times when a fiduciary relationship arises or is necessary to protect an asset. Some have fiduciaries entrusted with their investments, yet others are doctors and are entrusted by a patient. There is a confusing amount of information regarding what a fiduciary is, and even more so what a fiduciary relationship looks like, means, or how it arises. Today we are taking a look at the world of fiduciary relationships.
To understand a fiduciary relationship, the most integral place to begin starts with understanding what a fiduciary is in the first place. A fiduciary is a person or entity, such as an organization, which acts on the behalf of another person or group. The fiduciary is expected to put the client’s needs and interests ahead of their own, and they have an implied duty of good faith.
Good faith comes with its own onslaught of meanings and semantics, but in general is a way of describing acting honestly and in favor of their client.
A fiduciary can be responsible for another person’s wellbeing amongst other responsibilities, but most typically, a fiduciary will be entrusted with financial responsibilities. Financial advisors, managers of accounts, insurance agents, executors, and corporate officers all have fiduciary responsibilities, and are expected and obligated to abide by good faith.
Knowing what a fiduciary is, a fiduciary relationship is a relationship based on a legally backed trust. Fiduciaries are not always formal. A fiduciary may be assumed where one with superior knowledge on a subject matter acts on behalf of someone else.
Fiduciary relationships can be created when a contract is formed, when a definite written agreement defines a fiduciary relationship between two parties, or when a relationship is implied by law and by conduct of the two parties. Financial fiduciary relationships tend to be more formal and well-defined written agreements, but in some cases, there is an implied fiduciary. For example, while one might not think of a doctor as a fiduciary, a doctor-patient relationship is in fact a type of fiduciary relationship. Examples can provide a clearer understanding as to when a fiduciary relationship arises.
There are several relationships that act as fiduciary relationships. Some examples include an attorney and their client. They are expected to be loyal to their client, act in their client’s favor and not their own. Doctors and patients are fiduciary relationships in the every-day. Principal-agent relationships are fiduciary in nature, much like with financial fiduciaries, because one party is legally acting on the other’s behalf, and for the client’s sole interest.
The chances are you have a fiduciary relationship of some sort in your day to day life. If, however, you are looking for more information on whether or not certain types of fiduciaries are right for you, or how to navigate the world of fiduciaries, have confidence reaching out to our staff for more information. At King & Jones our Chicago breach of fiduciary duty lawyers believe every client should have access to information, and we are more than glad to assist and guide. For any questions or concerns regarding fiduciaries, please give our staff a call at 312-372-4142 today.