Fiduciary duty

What it means

A fiduciary duty is what attaches to somebody given power over another person's money or property. An executor, a trustee, an agent under a power of attorney and a guardian all hold one.

In practice it is three things: act in the other person's interest rather than your own, keep their money separate from yours, and keep records good enough to account for what you did.

Why it matters

It is personal. A fiduciary who gets it wrong can be made to repay the loss out of their own money, and good intentions are not a defense.

It is also the reason so much of Sahvelo's guidance says to write things down before acting. The record is not tidiness — it is the thing that answers the question later.

When you are likely to meet it

• When you are appointed executor or administrator.
• When you begin acting under a power of attorney.
• When a beneficiary asks where the money went and you have to answer.

How this varies by state

What a fiduciary must file, and how often, differs by state — some require a formal accounting to the court, others only to the beneficiaries, and a few require nothing unless somebody asks.

Related terms

• AdministratorThe person a court appoints to handle an estate when there is no will, or no usable executor.
• Attorney-in-factThe person a power of attorney gives authority to. Not a lawyer.
• Bona fide purchaserSomebody who buys property for value, in good faith, without notice of anyone else's claim to it. The law usually protects them, even against the rightful owner.
• ConservatorshipA court appointing somebody to manage the money and property of an adult who cannot manage it themselves.
• Creditor claim periodThe window, set by state law, in which somebody owed money by the estate has to present the claim or lose it.
• Deposit insuranceThe federal guarantee on money held in a bank or credit union, which continues for a period after the account holder dies.
• Digital assetAn online account or file that has value or meaning — email, photographs, cloud storage, domains, currency accounts, loyalty balances.
• Durable power of attorneyA power of attorney that keeps working after the person who signed it loses the ability to make decisions — which is usually the whole point of signing one.
• Employer identification number for an estateA tax identification number for the estate itself, which becomes its own taxpayer once the person's Social Security number stops being usable.
• Estate accountA bank account in the estate's own name. Estate money must not pass through anybody's personal account.
• Estate accountingA statement of everything that came into the estate and everything that went out, presented before the estate can be closed.
• Estate saleA sale of the contents of a house, usually run by a company on commission. It is one of several ways to clear a home, and rarely the only one worth considering.
• ExecutorThe person named in a will to carry it out — once a court actually appoints them.
• Executor compensationAn executor may generally be paid for the work. The payment is taxable income; an inheritance usually is not.
• FiduciaryAnybody who holds power over somebody else's money or decisions and is legally required to use it for them rather than for themselves.
• Financial exploitationTaking or misusing an older or vulnerable person's money or property. It is usually done by somebody they know.
• Firearms after a deathGuns in an estate are property with their own federal and state rules, and moving one to the wrong person can be a criminal offense rather than a paperwork error.
• GuardianshipA court appointing somebody to make decisions for an adult who cannot make them, usually about care, housing and medical treatment.
• Health care agentThe person named in a health care proxy to make medical decisions when the patient cannot.
• Insolvent estateAn estate that owes more than it holds. State law then decides who gets paid, in what order, and who gets nothing.
• Interested personAnybody the law says has a stake in an estate — an heir, a beneficiary, a creditor, sometimes a fiduciary. It decides who gets told and who may object.
• Inventory and appraisementA list of everything in the estate with a value against each item, filed with the court or given to the beneficiaries.
• Legacy contactA person you name inside an online account itself, whom the provider will let reach it after you die. It usually beats anything written in a will.
• Legal and equitable titleOwnership split in two: one person holds the property, another holds the benefit of it.
• Notice to creditorsA formal announcement that an estate has been opened, which starts the clock on how long anyone owed money has to say so.
• Personal representativeThe neutral term for whoever is authorized to act for an estate, whether named in a will or appointed by a court.
• Power of attorneyA document letting somebody act for you while you are alive — and which stops working the moment you die.
• Priority of claimsThe statutory order in which an estate's debts are paid. Paying out of order is the executor's own liability.
• Protected personThe person a conservatorship or guardianship is about — and a term whose meaning is not the same in every state.
• Representative payeeSomebody appointed by Social Security to receive and manage benefits for a person who cannot manage them.
• Revised Uniform Fiduciary Access to Digital Assets ActThe law, adopted in most states, that gives an executor, trustee or agent a route to a person's digital accounts.
• Successor trusteeThe person who takes over a trust when the original trustee dies, resigns, or can no longer serve.
• SurchargeA court order that an executor personally repay the estate for a loss their own breach of duty caused.
• Terms of a trustNot the same as the trust document — the terms are what the person who created it meant, and evidence outside the paper can establish them.
• TrusteeThe person or institution that holds and manages trust property for the people it is meant to benefit.
• Undue influencePressure that overcomes somebody's own wishes, so that a will, gift or transfer reflects the influencer's intentions rather than theirs.
• Vacant and unoccupiedTwo words an insurer uses differently, and the difference can void the cover on an empty house after a death.
• Authorized signerSomebody a bank permits to transact on an account they do not own. It is access without ownership, and it ends at the account holder's death.
• Successor agentThe person a power of attorney names to act if the first-named agent cannot. Without one, the document can be left with nobody able to use it.

Sahvelo guidance that uses this

• Being an executor
• The final accounting
• Managing money for a parent