The existence of a trust establishes that the trustees would be holding legal property for the benefit of another party known as the beneficiary. Fiduciary duties are owned by all trustees as they are placed in positions which require loyalty and good faith to the beneficiary. Consequently, the trustees are required to suppress their own interests and fulfil their obligations having the beneficiary’s best interest at heart.
Therefore, the power given to trustees to manage the legal title of the property has a fiduciary obligation attached to it. When such is granted, it is prima facie given to them by virtue of their office and as such it may be exercised by a survivor. Further, powers given to two or more trustees to be exercised jointly may be exercised by the survivor or by the personal representatives of the last of them, pending the appointment of new trustees.
The specific features of fiduciary duties
A fiduciary carries specific duties in relation to the trust property and those include for him to act in good faith to the beneficiary, not to make a profit from the position they are in, not to place themselves in a position where their own interest will conflict with the fiduciary duties and not to act to their own advantage or the benefit of a third person without the beneficiary’s informed consent.
Acting in good faith
The essence of fiduciary duty requires the trustee to be always promoting the beneficiary’s interests. Therefore, the fiduciary is required to do all in their power to comply with their obligations in a lawful manner and acting in good faith in accordance with that interest.
Further, they need to be open and fully frank with their principles, depending on their capacity, to be able to perform the duties. This could additionally include taking into account the beneficiary’s wishes.
No profit rule
A fiduciary must not profit from his position of authority. The rule would also include any funds which even if unrelated to the original fiduciary position resulted from an opportunity presented through the fiduciary position. Therefore, the essence of the rule is not on making a profit per se but on abusing the position for personal gain even if such did not result in profit.
In practice, if a profit has been made by the fiduciary by virtue of his position then that fact must be communicated to the beneficiary. Following that act, the beneficiary then has the power to authorise the trustee to keep the amount as remuneration for his services.
For more information on:
- Conflict of interest
- Benefit of his own or a third party
- Duration of the obligations
- Breach of duty