Fiduciary relationships are the bedrock of trust in various spheres of life, from finance to law to healthcare. These relationships demand the highest standard of care, transparency, and loyalty, as fiduciaries are legally and ethically bound to prioritize their clients’ best interests above all else. In the financial world, fiduciary advisors must guide investments with unwavering dedication to clients’ financial well-being, avoiding conflicts of interest.
In estate planning, fiduciary relationships ensure accountability, fostering confidence and long-term relationships. The integrity of such relationships not only prevents potential harm but also nurtures a culture of trust and responsibility, ultimately benefitting you and your beneficiaries.
Why is Fiduciary Duty So Important?
At the heart of it, fiduciary duty has little to do with money and more to do with responsibility. While fiduciary duty is often discussed in the finance and business world, it can be found in many other areas as well.
Fiduciary duty is the responsibility to act in the best interests of another party. To that end, fiduciary duty is important because you are putting someone in a position of authority so that they act in your best interest.
Good examples of this can be found on all levels of society, but some of the top levels show it best. A board of directors is chosen to help lead a business in the right direction and protect everyone including stake holders, from the errors of bad management. A government representative, such as a U.S. senator or city manager, have a fiduciary reponsibility to their constituents. A high profile legal case such as the recent Johnny Depp Amber Heard defamation case, illustrates the attorney-client fiduciary relationship in which both parties’ attorneys worked to protect their clients in this lawsuit.
A fiduciary is legally and ethically bound to prioritize their clients’ best interests above all else.
To better understand fiduciary relationships, let’s look at some of common relationships that you are likely to recognize.
Trustee and Beneficiary
Trustees are responsible for financially managing the trust, overseeing investments, assets, cash, and finances for their beneficiaries. If a trust is part of your estate plan, the trustee is the person or entity you will select to financially manage and oversee accounts within a trust, and who has a fiduciary responsibility to the trust’s beneficiaries and must make decisions in their best interests.
Doctor and Patient
In healthcare, doctors must prioritize patients’ health over their own financial gain or interests. For example, decisions for treatment should be to find a cure. Unnecessary tests or useless ongoing treatments should be avoided to theoretically pad their income.
Attorney and Client
The attorney-client fiduciary relationship demands absolute confidentiality, loyalty, and zealous advocacy, ensuring trust and safeguarding clients’ rights and interests in legal matters. Estate planning attorney, James Provenza, has developed long term trusting fiduciary relationships with personal clients and the charitable non-profits he has advised and guided over his 40 years as an attorney in the Chicago area.
Company leadership roles, like a board of directors and senior management, are trusted to care for the company – its interests and future profitablility. By extension the decisions leaders make should be governed by what is best for the company – its shareholders, employees, and mission. Sometimes there may be conflict in how best to do this and that is where tough decisions are made and accountablity is required.
There are other examples of fiduciaries such as a banker, a financial adviser, or a stockbroker, but we hope you get the idea. “Fiduciary” means trust, and a person with a fiduciary duty has a legal obligation to maintain that trust.
Trusted Chicago Estate Planning Attorney James Provenza
As you see, estate planning is another case where fiduciary duty comes into play. The attorney that sets up your estate has a responsibility to act in your best interest. Who you choose is critical. You want to choose an estate planning lawyer like Chicago’s James Provenza who has experience, extensive knowledge of the law, and integrity. He understands implicitly his fiduciary responsibility to you.