Powers of Trustee

Question 1

Sources of power

Answer 1

(1) powers expressly conferred in terms of trust
(2) powers that an unmarried individual has over her own property unless limited by the terms of the trust
(3) powers that are appropriate to achieve the proper investment, management, and distribution of the trust property that are not forbidden by the terms of the trust
(4) powers conferred upon her by the UTC (i.e. collect and hold assets, operate a business, acquire undivided interest in trust asset, invest, etc.) unless limited by the trust

Question 2

Joint Powers

Answer 2

Co-trustees who cannot act unanimously may then act by majority.

If vacancy occurs, other trustees may act for them

Question 3

Personal Powers

Answer 3

Powers may be personal to a specific trustee and therefore will not pass to successor trustees.

Can be implied but courts are reluctant to imply such result.

Note generally powers attach to the office of the trustee and are not personal - therefore they pass to successor trustees.

Question 4

Imperative Powers

Answer 4

Power is imperative (or mandatory) where trust terms require particular act.

If fails to do so, court may order trustee to act.

Question 5

Discretionary Powers

Answer 5

Most powers are discretionary but the powers must be exercised in good faith.

Subject to court’s review but if business judgment involved, then court will generally not interfere. Note court’s review is possible even if trustee give “whole” discretionary power.