Powers of Trustee

Question 1

Sources of Trustee’s Power

Answer 1

• trustee can properly exercise only such powers as are expressly or impliedly conferred upon them

Includes:
- powers expressly conferred on them by terms of trust
- powers granted by state law AND
- implied powers that aren’t appropriate to achieve proper investment, management, and distribution of trust property

Question 2

Sources of Trustee Power Under UTC

Answer 2

Trustee, w/o authorization by court, may exercise:
- powers conferred by the terms of the trust (which control)
- powers that an unmarried competent owner has over individually owned property
- any other powers appropriate to achieve the proper investment, management + distribution of trust property
- any other powers conferred by UTC

UTC confers many powers:
- power to collect + hold trust assets
- operate a business
- acquire an undivided interest in a trust asset
- invest trust assets
buy, sell or encumber trust assets
- enter into a lease
- vote securities
- pay taxes + assessments
- insure assets
- make distributions
- prosecute and defend actions

Question 3

Joint Powers

Answer 3

• co-trustees who are unable to reach unanimous decision may act by majority decision in many states
• if co-trustee cannot perform b/c of absence or illness, the remaining co-trustees may act for the trust

Question 4

Implied Powers of Trustees

Answer 4

Include:
- sell trust property
- lease trust property
- incur reasonable expenses
- mortgage trust property
- hire agents
- repair

Question 5

Discretionary Powers

Answer 5

• ones that trustee may or may not perform, as trustee determines in their judgment to be most appropriate
• trustee must exercise a discretionary power in good faith

Question 6

Liability for Abuse or Failure to Exercise Discretionary Power

Answer 6

• exercise of a discretionary power is subject to judicial review for abuse of discretion
• court will also intervene if trustee has completely failed to exercise judgment wrt discretionary power

Question 7

Grant of Absolute Discretion Subject to Court Review

Answer 7

• even if settlor grants trustee absolute or uncontrolled discretion wrt some matter, trustee’s acts are still reviewable by the court
• otherwise, there’d be no trust b/c there’d be no enforceable duties