Understanding Fiduciary Duties in Professional Appointments
When it comes to managing someone’s estate, financial affairs, or making key legal decisions, the person in charge must uphold a high standard of responsibility. This standard is known as a fiduciary duty. In the context of professional appointments – such as executors, trustees, attorneys under a lasting power of attorney (LPA), or court-appointed deputies – understanding fiduciary duties is critical for both the appointer and the appointed.
What Is a Fiduciary Duty?
A fiduciary duty is a legal and ethical obligation to act in the best interests of another party. In professional legal appointments, the fiduciary (the person appointed) is entrusted with power or property for the benefit of another individual (the appointer or beneficiary). This relationship requires absolute trust, integrity, and transparency.
Fiduciaries must avoid conflicts of interest, act with care and diligence, and not profit personally from their position unless expressly permitted. Breaching these duties can lead to legal consequences, including removal from the role or being held financially accountable.
Key Roles Involving Fiduciary Duties
Several professional roles carry fiduciary obligations. These include:
- Executor of a Will: Responsible for carrying out the wishes of the deceased as stated in their will.
- Trustee: Manages trust assets for the benefit of the beneficiaries in accordance with the terms of the trust deed.
- Attorney under a Lasting Power of Attorney (LPA): Makes decisions on behalf of someone who lacks mental capacity.
- Deputy appointed by the Court of Protection: Acts on behalf of a person who cannot make decisions and has no LPA in place.
The Core Fiduciary Duties
Here are the primary duties fiduciaries must observe in professional appointments:
1. Duty of Loyalty
Fiduciaries must always act in the best interests of the person they are appointed to represent. This means they must avoid personal gain unless explicitly permitted and must not put themselves in a position where their own interests conflict with their fiduciary role.
2. Duty of Care and Diligence
Appointees must handle responsibilities with competence and care. Whether managing an estate, making financial decisions, or handling healthcare choices, fiduciaries must make informed and prudent decisions.
3. Duty of Good Faith
Fiduciaries must act honestly, fairly, and with integrity. Even well-intentioned actions can breach this duty if they are dishonest or misrepresent the interests of the beneficiary.
4. Duty to Keep Accounts and Provide Information
Transparency is a key fiduciary obligation. Fiduciaries must keep accurate records and provide reports when required. This helps ensure accountability and builds trust in the appointment process.
5. Duty to Act Within the Scope of Authority
Fiduciaries must act strictly within the legal and contractual limits of their authority. Overstepping boundaries—even with good intentions—can result in personal liability or removal from the role.
Why Appoint a Professional?
While many people appoint family members or friends to fiduciary roles, there are advantages to choosing a professional such as a solicitor or professional trustee. Professionals understand the legal requirements, are impartial, and are less likely to be influenced by family dynamics or emotional pressure.
Some common scenarios where professional appointments are beneficial include:
- High-value or complex estates
- Family conflict or strained relationships among heirs
- International assets or multi-jurisdictional trusts
- Concerns about a layperson’s ability to handle legal responsibilities
Risks of Breaching Fiduciary Duties
Breaches of fiduciary duty can have serious consequences. These might include:
- Personal liability for financial losses
- Removal from the appointment by the court
- Legal action brought by beneficiaries or interested parties
- Damage to professional reputation
Because of this, it’s vital for appointees to understand their obligations, and for those making appointments to choose wisely.
How to Ensure Fiduciary Duties Are Met
Whether you are making an appointment or accepting one, here are key steps to ensure fiduciary duties are properly upheld:
- Seek legal advice before accepting or making appointments
- Understand the legal framework relevant to your jurisdiction
- Keep detailed and accurate records
- Communicate regularly with beneficiaries and stakeholders
- Document all decisions and the reasoning behind them
Final Thoughts
Fiduciary duties lie at the heart of professional appointments. Whether you’re appointing an executor, trustee, or attorney—or you’ve been appointed yourself—understanding these duties is essential to protect both legal rights and personal interests.
At Blake-Turner Solicitors, we provide expert guidance and can act as professional appointees when neutrality, experience, and compliance matter most. Contact us today for a confidential consultation.