Definition of 'fiduciary' often misunderstood
Fiduciary is a term that is often misused because of its complex definition and the variety of its meanings and uses, Toronto estates and trusts lawyers Ian M. Hull and Suzana Popovic-Montagn Huffington Post.
"While it refers to an individual that owes certain special obligations to another that are based on trust, it also describes the obligation itself, distinguishing it from ordinary obligations,” say Hull and Popovic-Montag, partners with Hull & Hull LLP.
"In fiduciary relationships, an individual such as an estate trustee or an attorney for property or personal care has certain obligations to another – a beneficiary or an incapable person. Not every obligation taken on by a person in a position of trust is a fiduciary obligation," they write. "When there are special obligations based on trust, they can be defined as fiduciary obligations."
Hull and Popovic-Montag note that it is necessary for trustees to understand the scope of their obligations as well to what standard their actions will be measured.
"Many, even professionals who are not necessarily familiar with this area of law, have trouble conceptualizing this idea but it becomes very important when the actions of a trustee are called into question, through litigation or otherwise," they say.
The article goes on to discuss how the courts have, over the years, indicated which obligations are considered to be fiduciary and which are non-fiduciary.
"When it comes to costs, if acting in a fiduciary capacity, a person may be indemnified or protected when they are required to take a difficult step. On the other hand, a fiduciary can be exposed to legal costs if they act improperly. If someone acts with dutiful and loyal conduct, the courts typically order their legal costs paid," Hull and Popovic-Montag write.
A recent episode of Hull & Hull TV, also featured in Huffington Post, discusses fiduciary issues with special guest David Freedman, counsel to the firm.