Fiduciary Obligation Definitions

Who Counts as a Fiduciary

Understanding fiduciary duty starts with the definition. The word "fiduciary" covers far more ground than most people expect. It reaches beyond trustees and executors. It includes guardians, conservators, a personal representative, receivers, agents under a power of attorney, partners, and corporate officers. Anyone acting in a fiduciary capacity for another person, trust, or estate falls under this statute.

The breadth of this definition matters for fiduciary duties and fiduciary responsibilities. The rules about how third parties deal with fiduciaries apply across a wide range of relationships. This includes situations well beyond traditional trust or estate arrangements. Even a family member acting under the terms of the trust may be considered a fiduciary.

Good Faith and Its Practical Meaning

This statute also defines what "good faith" means for the purposes of the Uniform Fiduciaries Act. A thing is done in good faith when it is done honestly, even if it is done negligently. That is a meaningful distinction. A bank that processes a check from a fiduciary account is acting in good faith as long as the bank is honest, even if the bank failed to notice a red flag that a more careful review might have caught.

This definition protects institutions and individuals who interact with fiduciaries. It sets the bar at honesty rather than perfection. Ordinary commerce does not grind to a halt every time a fiduciary account is involved. However, a breach of fiduciary duty can still create liability when the third party acts dishonestly.