Most people know what an executor is. But when it comes to the term “fiduciary”, it’s likely many Ontario residents don’t have a clue what the term means. In estate planning, a trustee is the ultimate fiduciary.
A fiduciary is a person (or even a company) who has the trust and confidence of another person or persons. This responsible person or company has four main duties regarding the management and administration of a trust, which also includes investment. Those four duties include the duty of loyalty, the duty of care, the duty of even-handedness and the duty not to delegate. Often the terms trustee and fiduciary are used interchangeably.
In Ontario, the Trustee Act stipulates that, “in investing trust property, a trustee must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments.” In doing so, a fiduciary must take into consideration seven things: the economic climate; projected total return on income and capital appreciation and how every investment may affect the overall portfolio of the trust. Those who hold the position of trustee/fiduciary must carry out the duties he or she has been assigned within the law. A breach of that trust may result in the trustee being held liable.
If funds are always invested as per a trust agreement, loss of funds would not constitute a breach of trust. If, however, the fiduciary acted recklessly or imprudently, he or she may be liable for breach of trust. Not every estate has a trust aspect, but many do.
Being named a trustee or a fiduciary may be confusing to some people. The help of an Ontario lawyer experienced in wills and estate law would be able to help. Such a lawyer would be able to explain any documents or answer any questions regarding the legalities of estate planning, including the explanation of trustees, executors and fiduciaries.
Source: advisor.ca, “The quintessential fiduciary“, Elaine Blades, Accessed on Sept. 22, 2017