Fiduciary Bond

What is a Fiduciary Bond?

Understanding fiduciary responsibility and the duties and obligations that are entailed are very important to those that undertake this task. The Fiduciary definition is defined as an individual, corporation, or association holding, managing and maintaining assets for another party. This is often done with the legal authority and duty to make decisions regarding financial matters on behalf of the other party. The most common types of fiduciary bonds are Conservatorship, Guardianship, Personal Representative, Trustee, and Representative Payee. A fiduciary bond is there to provide a financial offset to the protected person should the fiduciary steal or mismanage their assets.

The Fiduciary Duties Include:

To oversee the protected person’s assets in accordance with the powers given in the power of attorney, will, trust or through the powers granted by the court under their supervision. These powers typically revolve around the duty to protect and preserve the assets subject to control by the fiduciary and to establish that these assets are managed and maintained in a prudent and cautious manner.

The Fiduciary Responsibilities Include:

Understanding the terms and provisions in the fiduciary trust agreement, will, power of attorney or court order granting the fiduciary power.

Some of the Common Duties Include:

  • Upon reasonable request, provide copies of the fiduciary trust agreement and all amendments to the beneficiaries.
  • Locate all the assets and determine their values.
  • Provide documentation to all relevant financial institutions indicating that the fiduciary now has the authority over these assets.
  • Prepare an initial inventory of the assets, illustrating the tax cost bases and the current fair market value.
  • Pay all expenses, creditors and fees.
  • Prepare and file all necessary accountings and tax returns.