Fiduciary duties and accounting

Fiduciary duties and accounting

| Sep 10, 2020 | Trusts

As a fiduciary to a beneficiary, there requires a long-standing commitment to arrange financial details, make important decisions regarding a trust and keep an impartial head about things even when beneficiaries get heated over the division of trust assets.

As Forbes points out, the duties of a fiduciary involve managing the money and assets of a beneficiary. Even if the fiduciary is a family member, it is their duty to act as if their loved one is a professional client for the purposes of managing the trust. The responsibility comes with several duties and plenty of paperwork.

Duty of care

Duty of care refers to the responsibility of acting in the best interest of a client. A fiduciary’s task is to look at all the financial details of a trust and his or her beneficiary’s situation when making any decisions. This may involve analyzing pertinent information or referring to experts for their input regarding the best use for a trust’s assets.

Duty of loyalty

Duty of loyalty is the implication that, no matter what relation the fiduciary shares with the beneficiary, the fiduciary has no conflicts of interest regarding the trust. Fiduciaries cannot have a personal or private interest in what happens to the trust. Otherwise, they may make decisions that ignore the above duty of care.

Accounting

Both duties above require a comprehensive knowledge of a trust’s details. As AccountingTools reports, a fiduciary may need to provide annual, fiduciary accounting reports to show that the trust is in order. This involves a summary of accounts and several schedules involving receipts, disbursements and distributions. Though this accounting may seem daunting, there are resources available to any fiduciary in need of assistance.