In its simplest form, a fiduciary bank account is a deposit account in which the funds are owned by one individual or group of individuals and managed by another individual or group of individuals. Trusts and escrow accounts are among the most common forms of fiduciary accounts.


A trust is a legal entities created by a grantor on behalf of one beneficiary or more. The grantor then transfers assets -- either liquid or tangible -- into the trust and appoints a trustee to oversee distribution.

Estate Accounts

Very much like a trust account in function, estate accounts are established to oversee the final distribution of estate assets. In this case, an executor oversees the financial activities and ensures that all final liabilities are cleared before distribution to the heirs.


Escrow accounts have two primary uses. First, they hold funds until the purchase of service can be verified or terminated. This allows for relatively risk-free financial transfers for payments. Second, escrow accounts are used by mortgage lenders to hold funds on behalf of the borrower to pay taxes and insurance premiums.


Interest on lawyers trust accounts are vehicles to allow attorneys to maintain client funds in a separate account from the business funds of their firm. These accounts are established at no cost to the client or the attorney. Traditionally, funds are distributed to the clients rather quickly, but if funds are held for a substantial time, any interest earned will be forwarded to the client.

Choosing a Fiduciary

In considering a person to serve as a fiduciary for any account or asset, it is important to fully define the duties required. This will help prevent any confusion. Then, carefully examine the characteristics that are important for that particular position. It is imperative that the fiduciary maintain the highest level of trust and serve the best interests of all parties involved.