Definition of Fiduciary
Fiduciary is a legal relationship between two or more legal persons, pursuant to which one person is given the power to act for the other person or persons and burdened with the duty under the law to act exclusively for the benefit of that other person.
There are at least four different kinds of fiduciary relationship:
- Agent to principal
- Fiduciary owner of a private trust for private purposes
- Fiduciary owner of a social trusts for social purposes, such as a pension plan or charitable endowment
- Fiduciary owner of public lands held for the public’s use and benefit
Each of thee fiduciary relationship feature:
- a fiduciary PURPOSE for which the relationship is created;
- fiduciary POWERS through which to pursue that purpose; and
- a fiduciary DUTY to exercise those powers only in the prudent pursuit of that purpose.
Fiduciary Duty requires
- Loyalty to the purpose, and its beneficiaries;
- Prudence in the exercise of fiduciary powers;
- Competence in the prudent exercise of fiduciary powers.
The legal standard for fiduciary loyally, prudence and competence is the common sense of reasonable people of relevant knowledge and experience.