Fiduciary is a term we use within the legal realm to describe the type of relationship between two parties. This relationship comes with a high level of trust, confidence, and good faith. The fiduciary owes a duty (or responsibility) to the other person in the relationship. An example of a fiduciary would be an executor probating the estate of a loved one.
Basically, the fiduciary acts primarily for the benefit of another. Under the law, this fiduciary duty is the highest standard of care. This means that a fiduciary cannot put his or her personal interests first and cannot profit from his or her position as fiduciary.
A fiduciary under a Last Will and Testament has many duties according to the law, such as:
- Identifies and collects assets: According to the Texas Estates Code, a personal representative of an estate, which could include a trustee, executor, or administrator, is required to practice “ordinary diligence to collect all claims and debts due the estate and to recover possession of all property of which the estate has claim or title.” In other words, the executor, administrator, or trustee must take steps to make sure all assets have been identified and collected.
- Pays debts that were owed at the time of the decedent’s death: It is common for someone to pass away still owing a mortgage, loan, or other debt. One of the fiduciary’s responsibilities is to identify these debts and pay what was owed at the time of death in the priority pursuant to Section 355.102 and 355.103 of the Texas Estates Code.
- Pays applicable taxes relating to the estate: The fiduciary must determine what taxes are owed on the estate and pay the applicable amounts.
- Distributes the assets according to the Will: This duty is relatively straightforward. The trustee, executor, or administrator is required to dispose of the assets and property according to the deceased’s Will, or under the laws in Texas if no Will existed, or under a Trust.
As you can see, the fiduciary has a tremendous amount of responsibility and important duties.
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