What are the Duties of a Trustee?

Every trust must have a trustee to properly administer the elements of the trust. Trustees can be individuals, financial institutions or even organizations.

A trustee follows the precise instructions of the trustor (or the trustor’s authorized representative), and also adheres to rules imposed by law.

Prudent Person Rule

Trustees are subject to the “prudent person” rule. This rule states that trustees should use the same standard of care and diligence that any sensible person would use in managing property. Additionally, a trustee should make a strong effort and utilize all of his/her skills in caring for the trustor’s property.

Responsibilities

A trustee has the duty to accomplish the following:

• Administer internal affairs
• Manage property
• Invest property
• Distribute income and principal
• Deal with beneficiaries impartially
• Use discretion over the important areas of the trust

Beneficiaries

A trustee has a fiduciary duty to the trust’s beneficiaries as well as to the trustor. In dealing with beneficiaries, a trustee should:

• Use property only for the beneficiaries’ interest
• Disclose important facts
• Provide additional information related to the trust upon request of the beneficiaries

Improper Activity

A trustee should not:

• Use trust property for personal benefit or purposes not related to the trust
• Acquire interests in conflict with those of the beneficiary
• Sell property to himself/herself
• Delegate his/her duties to another individual

If a trustee is suspected of improper activity or misuse of his/her discretionary decision-making powers, the court will review the trustee’s actions after a petition is filed by the trustor or any beneficiary. A trustee may also petition the court for a review if beneficiaries question his/her decisions.

© 2022 NextClient.com, Inc. All rights reserved.

• Facts About Resulting Trusts
  There may be instances where property under a trust is transferred to the wrong beneficiary. This transfer can be corrected through a remedy called a resulting trust or an implied trust. Do not confuse a resulting trust, which is... Read more.
• Donations of Property and Tax Deductions
  The U.S. government has long encouraged citizens to contribute to charity. One method of encouraging philanthropic giving is the allowance of deductions from income for federal tax purposes for donations to “qualified”... Read more.
• General Rules Regarding Gift Taxes
  A gift tax is a tax on the privilege of making gifts to others while the taxpayer is still living. The gift tax supplements the estate tax, which taxes gifts made upon death. The gift tax was created to frustrate the attempts of those... Read more.
• Advance Directives for Health Care Decisions
  A power of attorney is a document that authorizes one or more individuals (collectively referred to as the “agent” or “attorney-in-fact”) to act on behalf of the person executing the document (the... Read more.

• What Planning Should You Do Prior To Selling Your Company?
• Important Estate Planning Conversations To Have At Thanksgiving
• How Tax Planning Services Really Work & What They’ll Cost You
• IRS Raising Annual Gift Tax and Estate Tax Exclusions in 2023
• Life Insurance Can Help With Estate Planning