Trust Administration and Trustee's Duties Flashcards
What is the modern trend regarding a trustee’s powers?
Give the trustee all those powers necessary to act as a reasonably prudent trustee
- power to sell transfer, or lease
- power to pay taxes
- power to sever
What is the first place to look when determining a truste’s powers?
The trust documents.
What does the trustee own?
Legal title.
What are the trustee’s duties?
Duty of Care and Duty of Loyalty
- act in best interest of beneficiaries
Who has standing to enforce the trustee’s duties?
any beneficiary
What is the Duty of Loyalty
- Objective Standard - reasonable person standard
- Self Dealing
- Conflict of Interest
What is the self-dealing analysis?
- no further inquiry - once you establish self dealing there is no further inquiry into the reasonableness of the action or good faith
- if the trust documents allow self dealing it must still be reasonable and fair.
How do you analyze conflict of interest?
Must be reasonable and with good faith.
What is the duty of care?
- Care that a person of ordinary prudence would practice in the care of his own estate
- Treat trust property as your own
- With Special skills you are held to a heightened standard
What are the rules of delegation?
Common Law - trustee cannot delegate authority
- can’t make investments outside of the list.
Modern: Prudent investor Rule - trustee is expected to diversify assets and measures the success of the portfolio as a whole.
What is the duty of impartiality?
Trustee has the duty to balance present and future beneficiaries.
Old Rule - life beneficiary entitled to income while remainder holder entitled to principal
Modern Rule - balance the allocation between income an dprincipal to treat life tenants and remainder holders fairly.
What are the trustee’s administrative duties?
Duty to inform beneficiaries + duty to account
