When a person in Minnesota sets up a trust, they will name a certain individual as the trustee. This is an important role that comes with significant responsibilities. Most trustees want to properly fulfill their role as trustee, including the fiduciary duty they have to the trust beneficiaries.
Having a fiduciary duty when it comes to trust administration means the trustee is legally in control of the trust assets, but the beneficiaries still retain equitable title to the trust assets. Per the trustee’s fiduciary duty, the trustee is obligated to handle the trust assets in a manner that serves the best interests of the beneficiaries. Therefore, it is important to understand what a fiduciary duty is.
When a person has a fiduciary duty to another party, this means that the fiduciary must act solely in a manner that benefits that party. It is a legal obligation. It is essential to make sure that the fiduciary does not have a conflict of interest with regards to his or her duties to the other party. In general, the fiduciary is not to be paid for fulfilling this role, unless the other party explicitly allows the fiduciary to be paid at the start of the relationship between the fiduciary and the other party.
Sometimes fiduciary issues arise. The fiduciary could be accused of self-dealing or mismanaging trust assets. Other fiduciary issues include not following the terms of the trust itself or committing a fraudulent act. Trustees must make sure they fully understand their duties, so they can avoid making mistakes that could lead to trust litigation.
Being selected as a trustee is an honor, but it is important for trustees to understand what is expected of them. Breaching one’s fiduciary duty could lead to undesirable consequences. Such a breach can harm both the trustee and the trust beneficiaries. If a trustee is unsure of what his or her duties are, he or she will want to seek the help needed to ensure he or she complies with the legalities of being a trustee.