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WHAT IS A FIDUCIARY?
A fiduciary refers to an individual who has the responsibility of looking after a person or their affairs considered to be vulnerable or where there is a dominance in the relationship, such as:
- an executor and estate trustee (of a Will and estate);
- a trustee (of a trust);
- an attorney (under powers of attorney for personal care or property); or
- a guardian (of the person or property).
WHAT IS FIDUCIARY DUTY?
Fiduciary duty refers to the obligation of a fiduciary to act in the best interests of the individual they represent.
Fiduciary duty can be broken down into further components:
DUTY OF LOYALTY AND TO AVOID CONFLICTS OF INTEREST
Fiduciaries must act in the best interests of the individuals they represent, set aside any personal interests they have that might conflict with the interests of whom they represent, and avoid unauthorized self-dealing.
DUTY OF GOOD FAITH
Fiduciaries must act honestly and in good faith, avoiding any action that can harm whom they represent.
DUTY OF DISCLOSURE
Fiduciaries must disclose full and accurate information to whom they represent and ensure transparency in their actions.
DUTY TO ACT WITHIN SCOPE OF AUTHORITY
Fiduciaries must only exercise their powers within the scope of authority that has been granted to them.
DUTY OF CARE
Fiduciaries are expected to responsibly carry out their responsibilities with a reasonable degree of care and diligence.
FIDUCIARY DUTY CLAIMS
Fiduciary duty claims refer to legal action taken against fiduciaries who have allegedly breached their fiduciary duties. These claims can be conducted by way of application or action depending on the grounds for the claim and the specific circumstances of each unique case.
The most common grounds for fiduciary duty claims include:
UNAUTHORIZED SELF-DEALING
When the fiduciary takes advantage of their position at the expense of whom they represent.
CONFLICT OF INTEREST
When the fiduciary fails to disclose a conflict or fails to manage it appropriately.
MISAPPROPRIATION OF ASSETS
When the fiduciary misuses or misappropriates assets for personal gain or other.
NEGLIGENCE OR BREACH OF DUTY OF CARE
When the fiduciary fails to meet the standard of care, resulting in harm to the represented individual.
FAILURE TO DISCLOSE
When the fiduciary fails to disclose information or discloses misleading information.
UNAUTHORIZED ACTION
When the fiduciary exceeds their scope of authority or engages in unauthorized action.
BREACH OF DUTY OF LOYALTY
When the fiduciary acts in personal interest rather than in the best interest of the represented individual.
FAILURE TO ACT IN GOOD FAITH
When the fiduciary acts dishonestly and not in good faith.
The lawyers at Sweatman Law are extensively experienced in guiding fiduciaries to fulfill their duties and making fiduciary duty claims.
Contact us here to get in touch today!
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DISCLAIMER: This blog post should not be interpreted as legal advice for your specific situation, concerns, or challenges. All legal situations are unique and should be reviewed by legal, financial, and health professionals, and tax accountants. Please be advised that the information on this website relates to laws specific to Ontario or Canadian federal law. Legal advice, procedure, and legislature may vary in different jurisdictions.
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