by Iris Forester

Created on: December 01, 2008   Last Updated: December 12, 2008

In a fiduciary relationship, one person places complete confidence and trust in another (the "fiduciary") to handle his or her affairs. There are different types of fiduciary roles which can occur in the process of planning and administering an estate: a personal representative or executor, named in a will; a trustee, named by a trust; and an agent, appointed by a power of attorney.

The fiduciary obligation centers around the requirement that everything the fiduciary does must be in the best interests of the client. Fiduciary responsibility is the highest of all obligations imposed on an individual in the law.

The fiduciary must be absolutely trustworthy, capable of carrying out the duties of his or her position, and must have a basic understanding of the court process (The fiduciary may use funds from the estate to hire an attorney or other professional to provide guidance. The attorney hired by a personal representative to provide guidance does not have a fiduciary relationship to the beneficiaries, however, but only to the hiring individual).

The fiduciary must be available to be able to perform the necessary duties without undue delay, and most importantly, they must be willing. Because of the seriousness of the commitment involved, the fiduciary must agree in a formal manner to serve in this role.

Furthermore, the fiduciary is expected to act impartially, not favoring one beneficiary over another. However, a personal representative cannot be charged with breach of fiduciary duties by carrying out a will which disappoints one of the beneficiaries. And the beneficiary may not contest a will in Michigan by introducing evidence external to the will, unless the will itself is ruled unclear in court.

Michigan has a law called the "Prudent Investor" rule, which states that the fiduciary involved in estate planning and administration must manage those assets in the way that any prudent investor would, while also taking into account the intent and circumstances of the documents which govern this estate.

Failure to follow the strict guidelines of fiduciary obligation can subject the fiduciary to personal liability. The fiduciary can be held personally liable to beneficiaries, creditors, taxing authorities, and/or third parties under contract. The fiduciary is liable for loss to an estate which results from mingling his or her own money with the estate's money, for failure to account adequately for transactions, for failure to terminate the estate, or for any other breach

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