Understanding the Fiduciary Duties of a Trustee

Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

If you have been named as Trustee or Successor Trustee of another’s Irrevocable Trust, you may be wondering what exactly the role entails. For Successor Trustees, your duties will not begin until the current Trustee is no longer able or willing to perform in that capacity. However, if you are currently serving as Trustee, there are some things you need to know.

In Nebraska and the 30 other states that have enacted the Uniform Trust Code[1], a Trustee is tasked with the following duties[2] (among many others):

  1. Duty to Administer Trust
  2. Duty of Loyalty
  3. Impartiality
  4. Prudent Administration

Duty to Administer Trust

The primary duty of a trustee is to follow the terms and purposes of the trust. When the terms of a trust are silent or if it does not address a particular issue, a trustee must use good faith when administering the trust.

Duty of Loyalty

A trustee owes a duty of loyalty to the beneficiaries. Expressed in a different manner, a trustee must not place the trustee’s own interests over those of the beneficiaries. Most violations of the duty of loyalty concern transactions involving the trust property, but breaches can also take other forms. For example, a trustee administering a trust owning a personal residence cannot receive a commission from an insurance agent for the procurement of a homeowner’s insurance policy for the home owned by the trust.

Impartiality

If a trust has two or more beneficiaries, the trustee is required to act impartially in investing, managing, and distributing trust property, taking into account the respective interests of each beneficiary. The duty to act impartially does not mean the trustee must treat all beneficiaries equally. Rather, they must be treated with respect to the terms and purposes of the trust.

Prudent Administration

The trustee is held to the prudent person standard when administering a trust and must exercise reasonable care, skill, and caution. That is, a trustee must act as prudent person would, by considering the purpose, terms, distributions, and other relevant provisions of the trust.

For additional information on your duties as Trustee, contact your Wealth Advisor, a member of the Wealth Enhancement Group or your estate planning attorney. Also, click here to watch our Executor Planning Checklist video.

Share:
facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.
Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

RECENT POSTS

Price Multiples, Not as Simple as High or Low

Among the many challenges to filtering out good long-term stock investments is determining a reasonable price to pay for shares. Various methods are used to arrive at this value, many of which incorporate a measure of how high today’s price is relative to some fundamental metric. These are …

How Much Should I Save for Retirement?

Published by Teresa Milner How much should I save for retirement? The easy answer to this question is: AS MUCH AS YOU CAN! I know there is more science and art to saving for retirement than this answer provides such as the questions of, “Who,” “What,” “When” and “Where?”

Spring Cleaning

When it comes to spring cleaning, the hardest part is to get started…but with a plan in place your financial closet refresher will get you on your way to a stimulating rest of the year. Your spring cleaning financial plan can be as simple as these three steps:

Use Your Budget to “Increase Your Paycheck”

I recently celebrated another birthday. I was disappointed when I remembered that, while my toys have gotten more expensive, they do not bring me even a fraction of the excitement a new set of Legos did when I was 6. But upon reflecting on some of the financial changes I’ve experience over …
1 2 3 84 85 86 87 88 90 91 92

Get in Touch

In just 15 minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.

Schedule a Consultation