What is meant by "co-fiduciary" in fiduciary practice?

In fiduciary practice, the term "co-fiduciary" refers to the situation where two or more parties share fiduciary responsibilities in managing a trust or assets. This collaboration is vital as it allows for diverse expertise and oversight, enhancing the decision-making process and ensuring that fiduciary duties are upheld. When multiple fiduciaries work together, they can provide checks and balances, thereby reducing the risk of mismanagement or conflicts of interest. The legal framework for co-fiduciary relationships also emphasizes the importance of communication and cooperation among the fiduciaries to serve the best interests of the beneficiaries effectively.

Each co-fiduciary holds individual responsibility for their actions, but they also share joint accountability for the overall management of the trust. This structure can lead to better outcomes for the beneficiaries, as each fiduciary may offer unique insights or skills that contribute to prudent investment and management decisions. The co-fiduciary concept reinforces the collaborative nature central to fiduciary duties, which is aimed at protecting the interests of those they serve.