Fiduciary derives from a Latin word meaning "trust." This word plays an important role in the duties of a trustee. The modern concepts of a trustee and fiduciary are interchangeable and often describe aspects of the legal relationship a trustee has with an estate's beneficiary. In acting on behalf of a beneficiary, a trustee is occupying a fiduciary position or a position of trust.
A trustee is an individual or a company named by another to manage property or assets held in trust. This is an arrangement in which the trustee holds the property or assets of another on behalf of a designated third party, usually referred to as the beneficiary. A trustee has an obligation to manage the assets or property contained in the trust without regard for personal gain. According to the Free Dictionary's website, the trustee is a fiduciary of the trust beneficiary and must conduct business affairs on behalf of the trust with the highest ethical standards.
Trustee Fiduciary Duties
Being a fiduciary to a trust beneficiary legally binds the trustee to act in the best interests of the beneficiary when managing the assets contained in the trust. The trustee must remain open with the beneficiary about the status of assets held in trust, including the balance of all accounts and the current fair market values of assets. This level of openness is a requirement of the position because the beneficiary basically owns the property held in trust, but does not gain access to the property until a specified time, usually upon reaching a predetermined age.
Trustee Knowledge Requirements
A trustee operating as a fiduciary to a beneficiary usually has specific knowledge of the law, finance or real estate to effectively manage the assets or property held in trust until the beneficiary takes full possession. The trustee has an obligation to use this knowledge to defend the property and assets held in trust so the beneficiary can enjoy the full value of the estate upon the formal transfer of property. A beneficiary might have no knowledge of how to manage the assets contained in a trust, so the trustee's position is one of both great power and responsibility.
Business Transaction Rules
A trustee and the estate's beneficiary might join to purchase property using finances held in trust, according to Law.com's Legal Dictionary. The trustee, acting in a fiduciary capacity, must still act in the best interest of the estate, and the beneficiary and should not enter into any purchase agreements that could hurt the long-term viability of trust accounts. The trustee has the power to pull out of any agreement that has a greater potential to harm the trust regardless of the beneficiary's wishes to pursue a deal.