Trust Administration Flashcards
The trustee can properly exercise such powers…
expressly or impliedly conferred upon them.
Co-trustees who are unable to reach a unanimous decision may act…
by majority decision.
A trustee’s exercise of discretion should not be overruled by a court unless…
the trustee has acted arbitrarily and in such a way as to impair the trust purposes.
A trustee may delegate powers and duties that a …
prudent trustee of comparable skill could properly delegate under the circumstances.
A trustee is not liable for any actions taken by their delegated agent if the trustee exercised reasonable care, skill and caution in:
- selecting the agent;
- establishing the scope and terms of the delegation; and
- monitoring the agent’s performance with a periodic review.
Trustees who invest within the legal list of investments prescribed by statute…
cannot be held liable for any resulting loss from these investments.
Under the Uniform Prudent Investor Act (“UPIA”), trustees must exercise…
- Reasonable care, skill, and caution in investing and managing assets;
- Prudence in investing, as applied to the entire investment portfolio.
Under the UPIA, investment returns are measured by the…
total return concept.
Whether the fiduciary has complied with the UPIA is determined in light of the facts and circumstances…
at the time the investment decision is made.
Fiduciaires with special skill or expertise are held to…
higher standards, and must exercise such skills or expertise in their investment decisions.
Absent a contrary provision, a trustee must invest any collected funds within…
a reasonable time, not to exceed 4 months.
A trustee of a revocable trust owes their duties…
solely to the settlor.
A trustee of an irrevocable trust owes their duties to…
all of the beneficiaries.
A transaction involving tustee self-dealing is voidable by the beneficiary affected by the transaction, unless…
- A court or the terms of the trust approved it;
- The beneficiary failed to bring suit within the prescribed time period;
- The beneficiary gave consent, ratification, or release; or
- It involves a contract or claim arising before the trustee became trustee.
A trustee’s duties include:
- Duty to administer the trust prudently, in good faith, and impartially;
- Duty of loyalty;
- Duty to report & respond to beneficiaries & provide annual accounting;
- Avoid commingling trust and trustee assets;
- Abide by the prudent investor rule.
If a trustee commits or is about to commit a breach of their trust duties, the court may:
- Enforce specific performance of the trustee’s duties;
- Enjoin the trustee from committing a breach of trust;
- Compel the trustee to pay money or restore property; or
- Suspend the trustee.
Most commonly, if a trustee commits a breach of trust, the trustee is liable to the beneficiaries for the greater of:
- The amount necessary to restore the trust property and distributions to what they would have been absent the breach; or
- The trustee’s profit from the breach.
A beneficiary must bring their action within ____ after receiving any report disclosing the breach.
1 year
If the beneficiary never recieves a report about the trustee’s breach, the beneficiary must bring their action within 5 years of:
- Removal, resignation, or death of the trustee;
- Termination of the beneficiary’s interest; or
- Termination of the trust.
[whichever occurs first]
A trustee is not liable for the breach of trust if…
- the trustee acted in reasonable reliance on the terms of the trust; or
- the beneficiary consented to the conduct, released the trustee from liability, or ratified the transaction.
Generally, a trustee is not liable for the acts of a co-trustee if they…
- Did not join the action; and
- Exercised reasonable care in preventing the breach or compelling the co-trustee to redress the breach.
A third party who knowingly participates in a breach of trust by the trustee is liable for…
the resulting loss to the trust estate.
The beneficiaries of a trust cannot bring an action against a third party who damages the trust property or is liable to the trustee on a contract unless the trustee:
- Participates in the breach of trust;
- Fails to sue the third party; or
- Abandons office.
