Trust Administration and Duties Flashcards
TRUST ADMINISTRATION
Trustee’s Powers
Trustees have broad powers unless limited by the trust instrument or law:
-Power to invest trust assets prudently (Georgia follows the Uniform Prudent Investor Act).
-Power to sell, lease, or mortgage trust property.
Power to make distributions as directed by the trust instrument.
TRUST ADMINISTRATION
Asset Allocation for Life Beneficiaries
Life Beneficiary entitled to trust income,remainder Beneficiary’s are entitled to principal upon trust termination;
FIDUCIARY DUTIES
Duty of Loyalty
The trustee is a fiduciary who owes a duty of loyalty and utmost good faith in the administration of the trust for Beneficiary’s benefit.
FIDUCIARY DUTIES
DUTY OF PRUDENCE
Trustee may delegate if unreasonable for Trustee to perform (ministerial functions); must oversee delegates;
must use reasonable care & judgment in investment decisions (diversification req’d); must be impartial in balancing the interests of all Beneficiaries.
Duties toward Beneficiaries
DUTY TO INFORM & ACCOUNT:
Trustee generally has a duty to keep the beneficiaries of the trust reasonably informed of the trust and its administration.
Trustee must disclose complete & accurate info of trust at Beneficiary’s request.
FIDUCIARY DUTIES
Duty to Collect, Preserve, and Segregate Trust Property
The trustee has a primary duty to hold and preserve trust property against loss or waste.
A trustee cannot commingle trust & personal assets.
TRUST ADMINISTRATION
Co-Trustee’s Powers
Co-Trustee’s must act unanimously unless trust terms express contrary intent.
TRUST ADMINISTRATION
Trustee duty to allocate assets
Trustee must allocate assets as income or principal in fair & balanced way to fulfill trust purpose.
½ of Trustee’s compensation & accounting expenses is charged to income, other ½ is charged to principal.
FIDUCIARY DUTIES
Duty to avoid conflicts(self-dealing)
The trustee must avoid conflicts between the trustee’s own interests and those of the trust and must not enter into transactions with the trust in an individual capacity unless the trust instruments authorizes such action, the court grants permission, or all the beneficiaries, who must be of age, competent, and fully informed, consent to the transaction.
FIDUCIARY DUTIES
Duty to Manage Trust Property with Care
The trustee has the duty to make the property productive and to use reasonable care and skill in choosing and managing investments.
Duties toward Beneficiaries
Duty to Inform-Irrevocable Trust
Within 60 days after the date of creation of an irrevocable trust or of the date on which a revocable trust becomes irrevocable, the trustee must notify the qualified beneficiaries of the existence of the trust and the name and mailing address of the trustee.
Duties toward Beneficiaries
Duty to Account
A trustee must provide an account at least annually, upon trust termination, and when a trustee changes, to each qualified beneficiary entitled to or potentially receiving income, and to anyone with revocation rights.
Duties toward Beneficiaries
Duty to Distribute Income
The trustee shall distribute all net income derived from the trust at least annually.
A trustee shall not be under any duty to investigate the resources of any beneficiary when determining whether to distribute trust property to such beneficiary.
If the trustee purchases, in an individual capacity, property that should have been purchased for the trust, the beneficiaries can compel the trustee to hold such property subject to
a constructive trust.
FIDUCIARY DUTIES
Duty to Act Impartially
The trustee’s duty of loyalty extends equally to all beneficiaries of the trust, regardless of whether they have present interests in the income or future interests in the income or principal; the trustee may not favor either over the other.
