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How Fiduciary services are relevant to you

The term “fiduciary” indicates that a person or organisation has undertaken to act on behalf of another in a particular matter that gives rise to a relationship of trust and confidence. The word derives from the Latin word “fiducia”, meaning “trust”.

It’s almost certain that, at some stage in your life, you, or your dependants, will have dealings with a fiduciary practitioner. Therefore, you should, if you have not done so already, draw up a will. Although anyone over the age of 18 can draw up a will themselves, it is recommended that this is done with the assistance of someone who is knowledgeable about the legal and tax implications.

An important aspect of your will is the appointment of an executor, who will step into your position when you die and administrate your financial affairs, distributing your assets in accordance with your will.

Although it is common for a family member to be nominated as an executor, this may not be the best course of action. An executor must follow a process laid out in the Administration of Estates Act and must be able to demonstrate to the Master of the High Court that he or she has complied with the legal requirements.

If you have dependants, you should have an estate plan drawn up to protect and preserve your assets from one generation to the next. Your estate plan needs to take a number of factors into account, including: ensuring there is sufficient liquidity in your estate to cover your debts, estate duty, taxes, cash bequests and funeral expenses; providing for your spouse and minor children, which may require setting up a testamentary trust; and succession planning if you are the owner or co-owner of a business.

If you belong to a retirement fund and have minor children, it is likely that the trustees of the fund will pay any benefit due to a minor child into a beneficiary fund, which will be administered by its own trustees.

In conclusion: A fiduciary could be an individual or company holding assets for another party, often with the legal authority and duty to make decisions regarding financial matters on behalf of the other party. The fiduciary has a duty to ensure that he or she acts in their beneficiaries’ interests, rather than serving their own interests. In South Africa, the term is most commonly used to refer to an industry in which the duty of care and trust is paramount, and specifically in the area of estate planning, drafting wills, and administering trusts, deceased estates and beneficiary funds. Fiduciary services helps greatly with handing over personal finances and wealth throughout one’s lifetime and well after that.

 

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