Many estate arrangements involve the relationship of a trustee and a beneficiary and the creation of a fiduciary duty. The individual who has been named as the estate trustee is likely to be the fiduciary and the beneficiary is the principal. Before going down this road, it is important for all Houston residents to understand the legal obligation they are creating and the responsibilities created by it.
A fiduciary refers to the legal relationship between two parties that necessitates one party to act solely for the benefit of the other party. Therefore, the fiduciary (trustee) owes this duty to the beneficiary (principal). Strict care must be taken to ensure that there is no conflict of interest between the two parties, and the fiduciary is often acting without receiving any profit, unless the contrary is stated at the onset of the agreement.
Creating a trust and appointing a trustee is a common estate planning move, but it is very important to ensure the trustee being appointed is one who can be trusted and who will make sound financial and legal decisions. A beneficiary holds an equitable interest in a trust, which is why the fiduciary is supposed to make decisions that are in the fiduciary’s best interests.
Where the fiduciary duties are breached, a fiduciary could be held accountable for their ill-gotten profit and the beneficiary will be entitled to damages. Working with an experienced attorney to either create an estate plan that outlines the role of trustee, executors, and fiduciaries or to hold a fraudulent trustee accountable may be beneficial for Houston residents.