Trust Administration

Question 1

Sources of Trustee’s Power

Answer 1

The trustee can properly exercise only such powers as are expressly or impliedly conferred upon her.

These include powers:

1. Expressly conferred upon her by the terms of the trust (which control),
2. That an unmarried individual has over her own property,
3. That are appropriate to achieve the proper investment, management, and distribution of the trust property, and
4. Conferred upon her by the FTC.

Question 2

Duties of the trustee

Answer 2

Under a revocable trust, a trustee’s duties are owed exclusively to the settlor.

For an irrevocable trust, a trustee owes duties to all of the trust benes.

Question 3

Duty to administer trust

Answer 3

The trustee has a duty to administer the trust in good faith and in a prudent manner, in accordance with the terms and purposes of the trust instrument and the interests of the benes.

If a trustee has special skills or expertise, she will be held to a higher standard.

If there is more than 1 bene, the trustee must act impartially, taking into account any of their differing interests.

Question 4

Duty of loyalty

Answer 4

Absent court approval or express waiver in the trust instrument, a trustee cannot enter into any transaction in which she is dealing with the trust in her individual capacity. A trustee owes a duty of undivided loyalty to the trust and its benes.

Question 5

Remedies for breach of trust

Answer 5

If the trustee commits, or is about to commit, a breach of his trust duties, the court may:

1. Enforce specific performance of the trustee’s duties,
2. Enjoin the trustee from committing a breach of trust,
3. Compel the trustee to pay money or restore property, or
4. Suspend the trustee.