In a Delaware Statutory Trusts (DST) and Individual Retirement Accounts (IRA), fiduciary duty refers to the legal and ethical obligation that a fiduciary (such as a trustee, financial advisor, or investment manager) has to act in the best interests of the beneficiaries or account holders. This duty is of the highest standard of care and includes several key responsibilities:
- Duty of Loyalty: The fiduciary must prioritize the interests of the beneficiaries or account holders above their own. This means avoiding conflicts of interest and not engaging in self-dealing.
- Duty of Care: The fiduciary must make informed and prudent decisions, exercising the same level of care, diligence, and skill that a reasonably prudent person would exercise in a similar situation.
- Duty of Good Faith: The fiduciary must act with honesty, integrity, and good faith, ensuring that all actions taken are in the best interest of the beneficiaries or account holders.
- Duty of Full Disclosure: The fiduciary must provide complete and accurate information, ensuring that beneficiaries or account holders are fully informed of all relevant facts and potential risks.
- Duty to Act in Accordance with the Terms: In the case of a DST or IRA, the fiduciary must act in accordance with the specific terms of the trust or account, adhering to any legal or contractual obligations.
In a DST, the trustee or sponsor has a fiduciary duty to the investors, ensuring that the trust’s assets are managed properly and in the best interest of the beneficiaries. In an IRA, the fiduciary could be a financial advisor or custodian who manages the account and is responsible for making investment decisions that align with the account holder’s retirement goals and risk tolerance.