Fiduciary Responsibility A Primer
When the general public imagines the legal world, they think of big cases with big players–multi-million dollar civil disputes, endlessly convoluted murder trials, or the deliberations of the Supreme Court that alters the law of the land.
However, it is almost inevitable that a person will be required to navigate the legal landscape, whether they are in need of mediation services in such situations as divorces cases,bankruptcy mediation, or arbitration service. Additionally, so many of these legal situations fly under the radar, or don’t make it to court in the traditional sense at all. For example, around 95 percent of personal injury cases are settled out of court.
The average person, if they intend to progress through the common legal obstacles of life such as creating a will, establishing a trust, being a health care agent, or being a guardian, should have a solid understanding of fiduciary responsibility and what it means for them.
Fiduciary responsibility is the ethical and legal obligation an individual has for their client. Someone who has been tasked with fiduciary responsibility (lawyer, accountant, guardian, director, or other agents) must always act in the best interest of their client. For example, a financial advisor cannot use his or her client’s money to make foolish investments or invest it in ways that benefit the advisor rather than a client. A lawyer cannot advise their client to act against their best interest even if they find their client reprehensible.
The loyalty involved in fiduciary responsibility is not just an ethical matter, or a guideline. If an agent is found to be neglectful of their fiduciary responsibility, they can be held liable for any damage incurred on their client as a result of their actions.
Many laypeople find themselves as an agent and charged with fiduciary responsibility (such as being named executor of a will or establishing a trust for a younger relative), therefore, it is of utmost importance to understand this legal concept. Without trust between agent and client, even a straightforward legal situation can become perilous.