6. Trustee's Duties (UPIA) Flashcards
Who does Trustee owe duties to?
Settlor (Revocable trust)
Beneficiaries (Irrevocable trust)
How must Trustee comply with duty of care?
Good faith
Prudent manner
- No animus
- Insurance
Exercise special skill/expertise (higher standard)
Not delegate discretionary functions
- Otherwise Trustee becomes guarantor for losses
How must Trustee comply with duty of loyalty?
NOT buy/sell trust property at fair/unfair price
NOT borrow funds/trust funds (unless protecting trust)
NOT use trust to secure personal loans
NOT personally gain as trustee
NOT invest in own stock as trustee
NOT self-deal (direct/indirect)
- NO consent (ben/court)
- Good faith/Benefit to trust NOT relevant
=> Make trust voidable (by affected ben)
How must Trustee comply with duty to report?
Give names/addresses/contact number to beneficiaries
Respond to beneficiaries’ request re trust admin info
Furnish annual accounting of trust
How must Trustee comply with duty not to commingle trust property with Trustee’s property?
Keep trust admin records
‘Earmark’ trust property as ‘trust’
Otherwise charge losses to Trustee/credit gains to trust
How must Trustee comply with duty to act impartially?
Uniform Principal and Income Act (UPAIA)
Allocate income + principal appropriately to life beneficiaries
Determine whether expenses relate to value of income + principal
Act exclusively to remaindermen beneficiaries
How must Trustee comply with duty to preserve and be productive?
Uniform Principal and Income Act (UPAIA)
Reasonable care, skill and caution
Exercise special skill + expertise
Evaluate based on ENTIRE trust portfolio
Prudent delegation of duties to agent
- Determine agent
- Determine scope + terms
- Periodically review agent’s decisions
Consider factors
- Economic conditions
- Inflation effects
- Taxes
- Expected income + capital
Charge losses to Trustee
Account for interest + profits that would have accrued but for breach
