What is fiduciary responsibility?


Quick Answer

A fiduciary is responsible to act only in the best interests of the party he was appointed to represent, Cornell University explains. Fiduciaries may not profit from their roles and must avoid any conflict of interest.

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Full Answer

The term fiduciary means an established relationship in which one person appointed to be responsible for the assets and money over another person or entity, About.com explains. The term fiduciary is a Latin word that means "trust" or "faith."

The board of directors for a company are also considered fiduciaries, states About.com. Their main responsibilities include avoiding conflicts of interest within the company; acting in the interest of the business instead of the member's personal interest; providing oversight to make certain all the business the company conducts is legal; and making decisions that best protects the assets of the corporation.

Generally, fiduciaries are appointed or elected because of their knowledge or expertise, SFGate explains. It's possible that a fiduciary relationship may be set by the terms of a sales agreement, will, trust agreement, or contract to full establish the legal relationship. Generally the establishment of the relationship outlines the specific duties of the fiduciary, the compensation, if any, he is to receive, and any recourse if the fiduciary violates the terms of the document.

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