What Is a Fiduciary Duty? A Guide for Kentucky Beneficiaries
If you’re a beneficiary of a trust or estate in Kentucky, you may have heard the term “fiduciary duty” — but what does it actually mean in practice? Understanding fiduciary duty is essential because it defines the standard of care that trustees, executors, and other fiduciaries owe to the people they serve. When that duty is breached, beneficiaries have legal remedies.
What Is a Fiduciary Duty?
A fiduciary duty is the highest standard of care recognized in the law. It requires the fiduciary — whether that’s a trustee, executor, guardian, or agent under a power of attorney — to act solely in the best interests of the person or people they serve. This isn’t the same standard that applies to ordinary business dealings or arm’s-length transactions. It’s a relationship of trust, and the law enforces it accordingly.
The Core Components
Duty of loyalty. The fiduciary must put the beneficiary’s interests ahead of their own. Self-dealing — using the position for personal gain — is the most fundamental violation. This means a trustee can’t buy trust property for themselves, lend trust money to themselves, or use their position to steer business to companies they own.
Duty of prudence. Under the Kentucky Uniform Trust Code, a trustee must administer the trust “as a prudent person would,” considering the purposes, terms, and circumstances of the trust. KRS 386B.8-040. For investment decisions, this means diversifying investments, considering risk and return, and making decisions that a reasonable person in similar circumstances would make.
Duty to inform and report. As discussed in KRS 386B.8-130, trustees must keep beneficiaries reasonably informed about the trust’s administration. This includes providing copies of the trust document on request, annual accountings, and notice of significant events affecting the trust.
Duty of impartiality. When a trust has multiple beneficiaries with different interests — for example, a current income beneficiary and remainder beneficiaries — the trustee must act impartially, balancing the interests of all beneficiaries rather than favoring one over another. KRS 386B.8-030.
Duty not to delegate improperly. While a trustee can hire professionals (accountants, investment advisors, attorneys), they can’t simply hand off all responsibility and stop paying attention. The trustee remains responsible for overseeing delegated functions.
What Happens When a Fiduciary Breaches Their Duty?
Kentucky law provides several remedies for breach of fiduciary duty. Under KRS 386B.10-010, the court can compel the fiduciary to perform their duties or to redress a breach, order the fiduciary to pay damages (a “surcharge”) for losses caused by the breach, void transactions tainted by self-dealing, reduce or deny the fiduciary’s compensation, and remove the fiduciary and appoint a replacement.
If you believe a trustee, executor, or other fiduciary isn’t meeting their obligations, I can help you evaluate the situation. Call me at (859) 225-9540 or use the contact form.
Joseph D. Buckles is a probate litigation attorney at Buckles Law Office, PLLC in Lexington, Kentucky.
