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.
"Fiduciary" includes a trustee under any trust, expressed, implied, resulting or constructive, executor, administrator, guardian, conservator, curator, receiver, trustee in bankruptcy, assignee for the benefit of creditors, partner, agent, officer of a corporation, public or private, public officer, or any other person acting in a fiduciary capacity for any person, trust or estate.
A.R.S. § 14-7501(A)(2)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.
A thing is done "in good faith" within the meaning of this article, when it is in fact done honestly, whether it be done negligently or not.
A.R.S. § 14-7501(B)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.