Fiduciary in Massachusetts: A Guide to Your Legal Obligations

As a fiduciary in Massachusetts, you have a legal obligation to act in the best interests of your clients. This means putting their needs ahead of your own and making decisions that are in their best financial interest.

There are a number of specific duties that fiduciaries in Massachusetts must adhere to, including:

• Duty of Care: You must act with the same level of care that a reasonably prudent person would exercise in similar circumstances.
• Duty of Loyalty: You must put the interests of your clients ahead of your own and avoid any conflicts of interest.
• Duty of Obedience: You must follow the instructions of your clients, unless doing so would be illegal or harmful to their interests.
• Duty of Accounting: You must keep accurate records of all financial transactions and provide your clients with regular accountings.

If you breach any of these duties, you may be held liable for damages.

Who is a Fiduciary in Massachusetts?

Under Massachusetts law, a fiduciary is anyone who has a duty to act in the best interests of another person. This includes:

• Trustees: Trustees are responsible for managing the assets of a trust for the benefit of the beneficiaries.
• Executors and Administrators: Executors and administrators are responsible for managing the estate of a deceased person and distributing the assets to the beneficiaries.
• Guardians: Guardians are responsible for protecting the interests of a minor child or an incapacitated adult.
• Attorneys-in-Fact: Attorneys-in-fact are authorized to make decisions on behalf of another person who is unable to do so.
• Investment Advisors: Investment advisors are responsible for providing investment advice to clients.

Fiduciary Duties in Massachusetts

As a fiduciary in Massachusetts, you have a number of specific duties, including:

• Duty of Care: You must act with the same level of care that a reasonably prudent person would exercise in similar circumstances. This means that you must:
  • Exercise due diligence in making decisions.
  • Stay informed about the relevant laws and regulations.
  • Consult with experts when necessary.
• Duty of Loyalty: You must put the interests of your clients ahead of your own. This means that you must:
  • Avoid any conflicts of interest.
  • Not use your position for personal gain.
  • Act in good faith at all times.
• Duty of Obedience: You must follow the instructions of your clients, unless doing so would be illegal or harmful to their interests. This means that you must:
  • Carry out your client's wishes to the best of your ability.
  • Keep your clients informed of all important matters.
  • Get your clients' consent before taking any major actions.
• Duty of Accounting: You must keep accurate records of all financial transactions and provide your clients with regular accountings. This means that you must:
  • Keep track of all income and expenses.
  • Prepare regular financial statements.
  • Provide your clients with copies of all financial records.

Breach of Fiduciary Duty

If you breach any of your fiduciary duties, you may be held liable for damages. This means that you may be required to pay your clients for any losses that they suffer as a result of your breach of duty.

The following are some examples of breaches of fiduciary duty:

• Self-dealing: Acting in your own interests instead of the interests of your clients.
• Conflicts of interest: Having a financial or personal interest that conflicts with the interests of your clients.
• Negligence: Failing to exercise the required level of care in making decisions.
• Breach of trust: Misusing or misappropriating your clients' assets.
• Failure to account: Failing to keep accurate records of financial transactions or failing to provide your clients with regular accountings.

Defenses to Breach of Fiduciary Duty

There are a number of defenses that you may be able to assert if you are accused of breaching your fiduciary duty. These defenses include:

• Lack of capacity: You did not have the mental capacity to understand your fiduciary duties.
• Duress: You were forced to breach your fiduciary duties by threats or coercion.
• Undue influence: You were pressured to breach your fiduciary duties by someone who had a dominant position over you.
• Statute of limitations: The claim for breach of fiduciary duty was not brought within the time period specified by law.

Conclusion

As a fiduciary in Massachusetts, you have a legal obligation to act in the best interests of your clients. By adhering to your fiduciary duties, you can help to protect your clients from financial loss and ensure that their best interests are always met.

Table 1: Common Fiduciary Duties

Table 2: Breaches of Fiduciary Duty

Table 3: Defenses to Breach of Fiduciary Duty

Table 4: Tips for Fiduciaries

FAQs

What is a fiduciary?

A fiduciary is anyone who has a duty to act in the best interests of another person.

What are the different types of fiduciaries?

There are many different types of fiduciaries, including trustees, executors, administrators, guardians, attorneys-in-fact, and investment advisors.

What are the duties of a fiduciary?

Fiduciaries have a number of duties, including the duty of care, the duty of loyalty, the duty of obedience, and the duty of accounting.

What are the consequences of breaching a fiduciary duty?

If a fiduciary breaches their duty, they may be held liable for damages.

How can I avoid breaching my fiduciary duties?

There are a number of things you can do to avoid breaching your fiduciary duties, such as keeping your clients informed, getting their consent before taking any major actions, keeping accurate records, and seeking professional advice when necessary.