In the trusts and estates context, a fiduciary is a person who stands in a special relationship of trust, confidence and responsibility in certain obligations to others.  Executors, trustees, guardians and agents under a power of attorney all stand in a fiduciary relationship to the principal and/or beneficiaries.

Persons, and corporations, acting as fiduciaries owe certain common law and statutory duties to the relevant beneficiaries.  A fiduciary's typical duties include carrying out the terms of the governing instrument (e.g trust or will), paying debts and taxes where applicable and carrying out administrative duties of the specific role.

But in addition to such general and administrative duties, there are some overarching principles and duties that fiduciaries owe to beneficiaries, particularly in the context of those serving as trustee or executor.  Breach of a fiduciary duty can result in a trustee being held liable for any resulting loss.  The following is a brief summary of three of the most fundamental duties owed by trustees and executors.

Duty of Loyalty.  In carrying out the terms of a trust, a trustee cannot conduct the business of the trust in a way that confers personal benefit or profit on the trustee or non-beneficiary third persons.  Such conduct would create an inherent conflict of interest.  Except in unusual situations with full disclosure and consent of all beneficiaries, or when the governing document provides otherwise, a trustee should not, among things: (a) buy trust property, (b) sell property to the trust, (c) lease property to or from the trust, (d) comingle trust and personal assets or (e) receive personal benefit in exchange for dealings with the trust.  A hallmark of the duty of loyalty is the refrain from taking actions that personally benefit the trustee or the trustee's family or affiliates.  However, the governing document itself may clarify or adjust this duty, particularly when the trustee or the trustee's family members are also beneficiaries, in which case the duty of impartiality may be implicated.  The duty of loyalty does not, of course, prevent a trustee from receiving reasonable compensation for its services.

Duty of Impartiality.  When there are multiple trust beneficiaries, either current or future beneficiaries, the trustee is under a duty to deal impartially wirh them.

Prudent Investor Rule.