What is a fiduciary's obligation in conflict of interest situations?

In conflict of interest situations, a fiduciary has a clear obligation to disclose potential conflicts and take steps to avoid making harmful decisions that could negatively impact the beneficiaries or the trust itself. This duty stems from the fiduciary's responsibility to act in the best interests of the beneficiaries, maintaining loyalty and protecting their interests above personal or other competing interests.

Addressing potential conflicts means that the fiduciary must transparently communicate any interests, relationships, or situations that could influence their decision-making. This proactive approach ensures that all parties involved are aware of the circumstances, allowing for informed decisions to be made and reinforcing trust in the fiduciary's role.

By prioritizing the avoidance of harmful decisions, a fiduciary upholds the ethical standards of their role, fostering credibility and maintaining the integrity of the trust or relationship with the beneficiaries. This commitment is foundational to the fiduciary's role, distinguishing their responsibilities from less stringent standards that do not carry the same ethical obligations.