Trust Administration and Duties: Flashcards
Powers
All enumerated; implied (sell property; incur expense; lease; borrow (under CL))
Duty of Loyalty
Administer trust for B’s benefit.
No self-dealing.
Duty to Invest
3 diff authorities.
(1) State List:
(2) CL Prudent Person Test:
(3) Uniform Prudent Investors Act:
Also Duty to diversify and Duty not to speculate
State List
In absence of directions, good investments are Fed government bonds, Fed insured certificates of deposit, 1st deeds of trust, public co stock.
No new businesses or 2nd deed of trust.
Common Law Prudent Person Test
Requires T to act as Reasonably Prudent Person investing own money.
Good investments are Fed gov bonds, 1st deeds of trust; Fed insured certificates of deposit; blue chip stocks; mutual funds.
No new businesses or 2nd deeds of trust.
Uniform Prudent Investors Act
T must act as prudent investor, as measured in context of entire trust portfolio.
Duty to Earmark
CL: if loss, T personally liable.
Mod: if loss, T personally liable only if loss from failure to earmark.
Duty to Segregate
No commingling with personal funds or trust of another.
Duty Not to Delegate
CL: T can rely on professional advisors, but can’t delegate authority to them. Unanimous T decision required.
Mod: T can delegate to professional advisors; T may act by majority.
Duty to Account
T must provide B’s with statement of income and expenses on regular basis.
Duty of Due Care
Must act as Reasonably Prudent Person would as if dealing with own affairs.
Duties re: Property
Duty to Collect/Protect Property
Duty to Maintain Marketability of Property
Duty to Keep Trust Property Productive
Remedies for Breach of Duty
Damages;
Constructive trust;
Tracing and equitable lien; Ratify transaction if good; Remove T.
Contract Liability to 3rd Persons
CL - T sued in personal capacity but may get indemnification from trust. T may be sued directly in rep capacity if K stated so.
Mod – if promisee knew T was acting in rep capacity, T must be sued in rep capacity.
Tort Liability to 3rd Persons
CL – T sued in rep capacity and, if without fault, can get indemnification from trust.
Mod – T sued in individual capacity and personally liable if T is at fault. If agent committed negligent act in case of strict liability, T sued in rep capacity.
