Trust Administration Flashcards
What is the Trustee duty?
A trustee has fiduciary duty to administer the trust in the best interest of the beneficiaries, a breach might result in personal liability of the trustee
What are T’s powers?
express power to revoke or modify
implied T has implied power to contract, sell, lease, or transfer trust property
Duty of Care
T must administer trust in good faith (subjective standard)
T’s discretion can be challenged if T failed to excrerise good judgement if any special skills heightened standard
Duty of loyaty
objective standard: no fraud or bad faith is required for breach
no self dealing, no conflict of interest
What does self dealing include
buy or sell trust assest from himself
transfer property between trust
borrow funds
use trust assest to secure a personal loan
engagae in prohibited transaction with friends or relative
When will the court no inquiry further into T actions?
If there is self dealing, it constitutes irrebutttale presumption
What is exception to the “no further inquiry”
even if the terms or beneficiaries authorize self dealing, the transaction must be fair and reasonable otherwise T will be in breach
Delegation
Modern Law allows T to delegate duties if it is unreasonable to expect T to perform the task but T must oversee decision making
What is Prudent Investor Rule
T has duty to invest & manage prudently
What is duty of impartiality
T must balance interest of present and future beneficiaries by investing property to produce preserving principal
Duty to inform
T must keep the beneficiaries informed about the trust property
Duty to Account
T must periodically account to beneficiaries unless waived by settlor
What are remedies for breach?
beneficiaries can remove the trustee, sue damages, ratify, tracing(may force T to sue 3P to trace or recover)
What are third party rights for breach?
T may be liable in contract or tort to third party
t can seek indemity if acting within scope of duties
What is remedial trust?
imposed by law can be resulting or constructive
Resulting trust
avoid unjust enrichment, the trustee is required to convey the property to settlor under: failure to express trust, incomplete dispoosition of trust
What is duty of prudence
trustee may delegate responsibility if it would be unreasonable for the settlor to require the trustee to perform
critical function can not be delectable
Duty to oversee decision
trustee can delegate the determination of management and investment strategies
prudent investor rule
trustee to act as prudent investor would when investing property, expertise reasonable care, causation, and skill
factors to consider in determining compliance a reasonable prudent investor
trust disturbution requirements
general economic conditions
investment in relation to trust overall investment portfolio
trust need for liquidity, income regularity, and preservation or appreciation
what other duties does trustee owe
duty to diversify, duty to make property productive, duty to be impartial
What are beneficiaries right to enforecement
lost profits, interest or other obligation that are affected because of breach or trust beneficiaries may sue the trustee and seek damages or removal or trustee for breach
liability for other acts
co-trustee minty liable
liable If predecessors breach if he failed to address it or was negligent in delivering property
third party liability
the trustee is personally liable on contracts entered into and for torts while acting as trustee
if property is transferred improperly to third party who is not BFP beneficiary or successor may have the transaction set aside
resignation of trustee
30 days notice to qualified beneficiaries living settlors, and co trustee
removal
by court because Trustee is incapable of performance or materially breaching duty
future interest
GOR retains reveries, possibility or reverter, or right of reentry, beneficiary si given remainder or executory interest
class gifts
share of deceased class member is paid to that class members surviving issue
Personal Representative
executor name in will or administrator appointed by court
what is priority for appointment
person named in will; serving spouse who is devisee, other devisees, serving spouse, other heirs, any creditor
what are principal dutues
provide notice to legatees, heirs, claimants
inventory, collect, manages assest
recieve and pay claims of creditors
distribute remaining assets
Fiduciary Duty of Personal Representative
owes highest duty of loyalty and care
CL: may be perosnally liable for actions of estate
UPC: can only be sued in representative capacity for breach of fiduciary duty
Powers of Appointment
power to decide whom property is given can be general or specify
general: no restriction or conditions on expertise of the power
SPecial: places limitation n holders expertise of power
What is scope of authority for power of appointment
any instrument can be used to excuse power unless donor says otherwise
testamentary power of appointed excised via will (need more then residuary clause in the will)
Powers of Attorney
General agent can handle all affairs when the principle is unable to do so
special agent powers limited to specific function or situation
scope of authority for power of attorney
agency continues until dealth of principal even if principal becomes incapacitated, fudicary duties, liability for intentional misconduct, revocation at any time
