A fiduciary duty is the strictest duty of care recognized by the legal system. Because of this, it is incredibly important that fiduciaries fulfill their responsibilities correctly and faithfully. Many people would be surprised by how broadly fiduciary duty can be applied and how unintentional actions could cause a breach. Here is everything you need to know about fiduciary duty, whether you were appointed a fiduciary or principal (the party to whom the fiduciary owes a duty).

When a breach of fiduciary duty occurs, it can be devastating for those involved. This is because fiduciary and beneficiary relationships require a great amount of trust in order to be successful. Recently, an Estee Lauder employee filed a lawsuit against the company after the security of her 401(k) account was breached occurred. The employee accused the business of breaching its fiduciary duty to her after they failed to report the security breach.

A fiduciary duty is the highest duty imposed by law, and while there are many types of fiduciary relationships, the definition is very broad. Generally speaking, a fiduciary duty exists between a fiduciary and a trustee. The fiduciary is expected to act in the best interest of the trustee. This relationship applies to lawyers and clients, doctors and patients, and legal guardians and their wards. However, these are all very different relationships, so a one size fits all approach to the handling of a fiduciary duty can often lead to litigation. But, the definition of fiduciary duty could see some changes in the near future when it’s applied to brokers and investors.