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

10 Answers to Questions About the Bear Market

2022 has been historically difficult for investors so far, and it’s likely you have questions. We’re here to answer some of the most common questions we’re hearing nowadays.

Your Most Common Social Security Questions Answered

Chances are good we’ve all felt a bit like Rachel on “Friends” when she peruses her first paycheck in bewilderment and says, “Who’s FICA? And why’s he taking all my money?”

Claiming Your Social Security Benefits Early: When It May Not Pay to Wait

Ryan Yamada, CFP®, Senior Wealth Planner We’ve all heard the conventional wisdom when it comes to claiming Social Security: you should wait as long as you can before claiming benefits. Wait right up to age 70, if possible. After all, that’s when you would get the greatest monthly benefit.

1 2 3 86 87 88

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