What does Fiduciary mean? It sounds like a complex and complicated word. Perhaps you’ve heard of the term in the news or in an Economics class. Legally, the term refers to the trust between, for example, a company and its shareholders. When used as a noun, the word fiduciary simply means a trustee. Finally, in terms of finance, the word refers to the relationship between paper currency and its value. Some currencies are backed by gold, others, the repute of the currency issuers.
This article shall briefly delve into the meaning of the word fiduciary. Without exploring its etymology, we shall see how fiduciary matters govern many aspects of finance, law, and currency.
Fiduciary, Defined More Closely
A person entrusted with fiduciary responsibilities administers the assets of the trusts under his responsibility, These include preparation of trust contracts, integration of the trust file, completion of procedures before authorities, registration of property ownership, private accounting, investment of resources, financial operations, granting of powers, identification, measurement and mitigation of risks, attention to instructions, execution of guarantees, attention to instructions, termination.
Fiduciary Responsibilities, In-Depth
In a deeper sense, a fiduciary trustee's responsibilities include the following:
Defend heritage of a company or person
Enforce the findings of a company
Is accountable to a person or company for their enforcement of the trust
Obey legal statutes
Non-delegation of his or her responsibilities
Manage the assets in the interest of the beneficiaries
The trust agreement between the fiduciary as trustee and the trust can expand or reduce these responsibilities but rarely do they amend or eliminate them. The fiduciary in some cases may be liable for losses to the estate that result from their actions or ignorance of legalities.
Moreover, the fiduciary’s responsibilities are sometimes referred to as “fiduciary liability.” This is especially the case when a person has responsibility for third party matters.