Duties of Trustee Flashcards
Duties Generally
Trustee has duty to ensure security of trust property and the fairness of its administration
Duty to Administer Trust
Trustee must administer the trust in good faith and in a prudent manner.
Trustee with special skill is held to higher standard.
Must administer trust solely in the B’s interest. If more than one B, must act impartially, taking into account differing interests of the B.
Trustee is allowed to incur reasonable costs that are appropriate and reasonable relative to the assets, trust purpose, trustee skill.
Duty of Loyalty - No Self Dealing
A trustee cannot enter into any transaction in which she is dealing with the trust in her individual capacity.
Cannot wear two hats because trustee might act improperly in an individual capacity. Trust can be tainted by personal interests.
Good faith is irrelevant.
Duty extends equally to ALL Bs.
Duty of Loyalty - Specific Rules
Cannot Buy/Sell Trust Assets:
Cannot Sell Assets from One Trust to Another:
Cannot Borrow Trust Funds or Make Loans:
Cannot use Trust Assets to Secure Personal Loan:
Cannot Personally Gain Through Position as Trustee:
Corporate Trustee Cannot Invest in Its Own Stock:
Self-Employment (sometimes prohibited)
Duty of Loyalty - Indirectly
A transaction is presumed to be in violation of the trustee’s duty of loyalty if it is entered into by the trustee with (1) spouse, (2) descendants, siblings, parents, or their spouses, or (3) agent/attorney, (4) corporation or other person/enterprise in which she is a trustee.
Duty to Report
Trustee has a duty to report and keep Bs reasonably informed of the trust and its administration.
Within 60 days of accepting the trust, trustee must inform the qualified B’s of the trustees contact info.
Trustee must respond to requests for information
Must provide copy of trust instrument if requested.
Must furnish annual accounting of the trust.
Duty to Separate Trust Property - No Commingling
Trustee may not commingle her assets with the trust assets. She must earmark trust property by labeling it as trust, rather than individually owned property.
Trustee must keep records as well.
If commingle and trust property lost or destroyed, it is presumed that the property lost was the trustees own.
If commingle and assets decline or rise, it is presumed that the trust assets rose but that the trustee’s asset declined.
Duty to Enforce Claims/Defend Trust
Self explanatory
Duty to Preserve Trust Property and Make it Productive
there is an implied duty to make the trust property productive which includes the duty to invest.
Trustee must exercise reasonable care in doing the following:
(1) collect all claims due
(2) lease land or manage it so that t is productive
(3) record recordable documents
(4) invest trust funds
