The 5 Roles of Your Fiduciary

Posted by Ned Armand, President of Eastern Point Trust Company on Apr 27, 2015

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Fiduciaries often take many roles when performing their job. Not all are the same, despite following similar role guidelines.

Key Takeaways

  • Not all fiducaries share the same principles, even though the guidelines of their roles are strict.
  • It is important to understand fiduciary roles and resposabilities when appointing your trustee.
  • Third-party, instiutional trustees are often more accurate in performing fiduciary duties, in contrast to a personal trustee whos decisions may be clouded by their personal relationship with the grantor.

 

The Roles of a Fiduciary

After understanding what a fiduciary is, it is important to know the roles fiduciaries have. Knowing that fiduciary relationships entail upholding certain duties – (1) the duty to act loyally to another party and (2) the duty to care for another party, is critical because it will help you differentiate between fiduciaries and non-fiduciaries.

Fiduciaries wear many different uniforms and carry many different responsibilities. Fiduciaries can be your mother, your neighbor, your financial advisor or preferably your professional independent trustee. Whatever their titles may be, their roles are all the same. Here are five to start off:

  1. The altruist. Fiduciaries may not profit from their relationship with another party, unless they have contractual consent by that party.
  2. The law-abider. Fact: fiduciary relationships are the strictest duty of care governed by the United States judicial system. Penalties are severe if a fiduciary breaks their role.
  3. The perfectionist. Since their roles must be upheld, by law fiduciaries must perform their duties perfectly to be effective.
  4. The master. The expertise fiduciaries often have distinguishes them from other types of financial planners. Fiduciaries can become certified fiduciaries, and must have an extended knowledge of law, finance, and trusts.
  5. The trusted. A Trustee in the form of a fiduciary ensures that an individual’s assets are being used exactly how they intended for them to be used. The fiduciary is guided by the terms of the trust and by law.

Institutional Trustees and Fiduciaries

Third-party trustees are a great way to get the most out of your assets. Being that fiduciary relationships are highly revered, they can come at a higher cost. However, having the highest form of oversight may be worth it as you can enjoy peace of mind that your and the beneficiary(ies) trustee is unbiased and professionally held to the highest possible standard. Experienced low-cost, third-party trustees are not readily available, but Eastern Point Trust Co. offers extremely affordable robo trustee services such as Kiss Trust.

Download a Personal Trustee Checklist See How Kiss Trust Compares

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Tags: Fiduciary Duty, Fiduciary Roles, Robo-Trustee, Fiduciary Relationships

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