Under Michigan law, a fiduciary relationship is defined as “a relationship in which one person is under a duty to act for the benefit of the other on matters within the scope of the relationship.” In re Karmey Estate, 468 Mich 68; 658 NW2d 796 (2003), citing Black’s Law Dictionary (7th ed). Generally, Michigan law gives rise to a fiduciary relationship when:
- one reposes trust in the faithful integrity of another, who gains influence over that person;
- one assumes control and responsibility over another;
- one has a duty to act for or advise another on matters within the scope of the relationship; and
- the specific relationship has traditionally been recognized as involving fiduciary duties.
Banker & Brisebais Co v John C. Maddox, CPA, unpublished opinion per curiam of the Michigan Court of Appeals, issued April 29, 2014 (Docket No. 310993).
Generally, a fiduciary duty is an obligation to do what is in someone else’s best interest; examples include a trustee-beneficiary relationship, an attorney-client relationship, a patient advocate, or someone with a durable power of attorney. With respect to business/corporate law (closely held businesses, such as an LLC), fiduciary duties include the duty of good faith, the duty of loyalty, and the duty for directors, officers, members and managers to make certain disclosures.
In plain English. In other words, a fiduciary duty is like the “golden rule,” whereas we are required to “treat others how we would like to be treated” within the scope of a professional relationship.