Duties of trustee: Difference between revisions
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The '''duties of the trustee''' are such duties and responsibilities that are not usually included or described in the trust instrument, and which trustee should follow. These responsibilities vary depending on the region. Most trust instruments are expected to be subject to the laws of the region in which the trust property is located. Trustee must read carefully the trust document and consult with a local attorney to become familiar with their duties<ref>Jackins B. D., Blank R. S., (2005), ''[https://books.google.pl/books?id=qDeb9m9BQjIC&pg=PA85&dq=Duties+of+trustee&hl=pl&sa=X&ved=0ahUKEwj-48XUt67hAhVhxosKHQVuAioQ6AEIKTAA#v=onepage&q=Duties%20of%20trustee&f=false Special Needs Trust Administration Manual: A Guide for Trustees]'', iUniverse, New York, p. 85</ref>. The most important feature of the duty is that the trustee has no choice - the obligation must be fulfilled<ref name="p1">Edwards R., Stockwell N., (2005), ''[https://books.google.pl/books?id=36VammuziHMC&dq=Duties+of+trustee&hl=pl&source=gbs_navlinks_s Trusts and Equity]'', Pearson [[Education]], Essex, p. 402</ref>. | The '''duties of the trustee''' are such duties and responsibilities that are not usually included or described in the trust instrument, and which trustee should follow. These responsibilities vary depending on the region. Most trust instruments are expected to be subject to the laws of the region in which the trust property is located. Trustee must read carefully the trust document and consult with a local attorney to become familiar with their duties<ref>Jackins B. D., Blank R. S., (2005), ''[https://books.google.pl/books?id=qDeb9m9BQjIC&pg=PA85&dq=Duties+of+trustee&hl=pl&sa=X&ved=0ahUKEwj-48XUt67hAhVhxosKHQVuAioQ6AEIKTAA#v=onepage&q=Duties%20of%20trustee&f=false Special Needs Trust Administration Manual: A Guide for Trustees]'', iUniverse, New York, p. 85</ref>. The most important feature of the duty is that the trustee has no choice - the obligation must be fulfilled<ref name="p1">Edwards R., Stockwell N., (2005), ''[https://books.google.pl/books?id=36VammuziHMC&dq=Duties+of+trustee&hl=pl&source=gbs_navlinks_s Trusts and Equity]'', Pearson [[Education]], Essex, p. 402</ref>. | ||
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'''The primary duty of trustees''' is to fulfill the objectives of trust with [[due diligence]]. In so doing, they are required to exercise their rights in good faith in the interests of the beneficiaries and not to develop their own personal preferences. '''Trustees perform their rights in the area of trust [[management]] and are subject to a number of general and specific duties'''<ref>Finlay J., (2012), ''[https://books.google.pl/books?id=nlyrBgAAQBAJ&dq=Duties+of+trustee&hl=pl&source=gbs_navlinks_s Trusts]'', Edinburgh University Press, Dundee, p. 61</ref>. | '''The primary duty of trustees''' is to fulfill the objectives of trust with [[due diligence]]. In so doing, they are required to exercise their rights in good faith in the interests of the beneficiaries and not to develop their own personal preferences. '''Trustees perform their rights in the area of trust [[management]] and are subject to a number of general and specific duties'''<ref>Finlay J., (2012), ''[https://books.google.pl/books?id=nlyrBgAAQBAJ&dq=Duties+of+trustee&hl=pl&source=gbs_navlinks_s Trusts]'', Edinburgh University Press, Dundee, p. 61</ref>. | ||
== General duties of trustee == | ==General duties of trustee== | ||
There are so many [[types of trust]] that as general duties we can only present a few and they are very common<ref>Maitland F. W., (2011), ''[https://books.google.pl/books?id=UnM60y6brygC&dq=Duties+of+trustee&hl=pl&source=gbs_navlinks_s Equity: A Course of Lectures]'', Cambridge University Press, Cambridge, p. 93</ref>: | There are so many [[types of trust]] that as general duties we can only present a few and they are very common<ref>Maitland F. W., (2011), ''[https://books.google.pl/books?id=UnM60y6brygC&dq=Duties+of+trustee&hl=pl&source=gbs_navlinks_s Equity: A Course of Lectures]'', Cambridge University Press, Cambridge, p. 93</ref>: | ||
* A trustee is limited to what is explicitly prohibited by the instrument creating the trust. | * A trustee is limited to what is explicitly prohibited by the instrument creating the trust. | ||
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# A trustee must act honestly and with the level of skill and prudence that can be expected from a reasonable business man who manages his own affairs. | # A trustee must act honestly and with the level of skill and prudence that can be expected from a reasonable business man who manages his own affairs. | ||
== Other duties of the trustee == | ==Other duties of the trustee== | ||
The responsibilities outlined below are more specific and relate to specific behaviors depending on the terms of the trusteeship<ref>Jackins B. D., Blank R. S., (2005), ''[https://books.google.pl/books?id=qDeb9m9BQjIC&dq=Duties+of+trustee&hl=pl&source=gbs_navlinks_s Special Needs Trust Administration Manual: A Guide for Trustees]'', iUniverse, New York, p. 85-92</ref>: | The responsibilities outlined below are more specific and relate to specific behaviors depending on the terms of the trusteeship<ref>Jackins B. D., Blank R. S., (2005), ''[https://books.google.pl/books?id=qDeb9m9BQjIC&dq=Duties+of+trustee&hl=pl&source=gbs_navlinks_s Special Needs Trust Administration Manual: A Guide for Trustees]'', iUniverse, New York, p. 85-92</ref>: | ||
* '''[[Standard]] of care''' - a trustee must invest and manage assets as a prudent investor, taking into account the purpose, conditions and other circumstances. | * '''[[Standard]] of care''' - a trustee must invest and manage assets as a prudent investor, taking into account the purpose, conditions and other circumstances. | ||
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* '''The duty of impartiality''' - a trustee must act impartially in the investment and management of fiduciary assets, taking into account all other interests of the beneficiaries. | * '''The duty of impartiality''' - a trustee must act impartially in the investment and management of fiduciary assets, taking into account all other interests of the beneficiaries. | ||
==Footnotes== | ==Footnotes== | ||
<references /> | <references /> | ||
{{infobox5|list1={{i5link|a=[[Loss adjustor]]}} — {{i5link|a=[[Corporate trustee]]}} — {{i5link|a=[[Management rights]]}} — {{i5link|a=[[Chartered wealth manager]]}} — {{i5link|a=[[Nominee director]]}} — {{i5link|a=[[Real estate management]]}} — {{i5link|a=[[Reliance letter]]}} — {{i5link|a=[[Authorized person]]}} — {{i5link|a=[[Agency Broker]]}} }} | |||
==References== | ==References== | ||
Latest revision as of 20:30, 17 November 2023
The duties of the trustee are such duties and responsibilities that are not usually included or described in the trust instrument, and which trustee should follow. These responsibilities vary depending on the region. Most trust instruments are expected to be subject to the laws of the region in which the trust property is located. Trustee must read carefully the trust document and consult with a local attorney to become familiar with their duties[1]. The most important feature of the duty is that the trustee has no choice - the obligation must be fulfilled[2].
Trustees have a number of rights related to the administration of trust. Some of them result from general law, while others are clearly defined by the conditions of trust. Some of the powers relate to the way in which trustees deal with trust property, other rights concern the treatment of trustees by the beneficiary. The duties of trustees are not obligatory, the way in which they work depends on them. Only when the trustee has made decision in bad faith that the court can decide how to perform the duties of the trustee[2].
The primary duty of trustees is to fulfill the objectives of trust with due diligence. In so doing, they are required to exercise their rights in good faith in the interests of the beneficiaries and not to develop their own personal preferences. Trustees perform their rights in the area of trust management and are subject to a number of general and specific duties[3].
General duties of trustee
There are so many types of trust that as general duties we can only present a few and they are very common[4]:
- A trustee is limited to what is explicitly prohibited by the instrument creating the trust.
- A trustee can safely do everything that is explicitly authorized by this instrument.
- A trustee is obliged to refrain from doing anything that is explicitly prohibited by this instrument, provided that the provisions of the trust instrument are not invalid or unlawful in any way.
- A trustee must play the role of a prudent owner and a reasonable entrepreneur in compliance with the above principles.
According to Graham Moffat, we can distinguish the following three general duties[5]:
- A trustee can not delegate his office to others.
- No trustee can enjoy personal benefits from trust property transactions.
- A trustee must act honestly and with the level of skill and prudence that can be expected from a reasonable business man who manages his own affairs.
Other duties of the trustee
The responsibilities outlined below are more specific and relate to specific behaviors depending on the terms of the trusteeship[6]:
- Standard of care - a trustee must invest and manage assets as a prudent investor, taking into account the purpose, conditions and other circumstances.
- Confidence in portfolio as a whole - trustee's decisions related to the investment and management of individual assets should be considered in the context of the entire trust portfolio as part of the overall investment strategy.
- Diversification of assets - a trustee must reasonably diversify trust investments, unless it is reasonable under the circumstances to not do so.
- The duty of loyalty - trustee must invest and manage fiduciary assets only in the interests of the beneficiaries.
- Initial duty to review trust assets - a trustee must review the assets and take decisions on asset regulation in due time after accepting the trusteeship or received the trust securities.
- The duty of impartiality - a trustee must act impartially in the investment and management of fiduciary assets, taking into account all other interests of the beneficiaries.
Footnotes
- ↑ Jackins B. D., Blank R. S., (2005), Special Needs Trust Administration Manual: A Guide for Trustees, iUniverse, New York, p. 85
- ↑ 2.0 2.1 Edwards R., Stockwell N., (2005), Trusts and Equity, Pearson Education, Essex, p. 402
- ↑ Finlay J., (2012), Trusts, Edinburgh University Press, Dundee, p. 61
- ↑ Maitland F. W., (2011), Equity: A Course of Lectures, Cambridge University Press, Cambridge, p. 93
- ↑ Moffat G., (2005), Trusts Law: Text and Materials, Cambridge University Press, Cambridge, p. 405
- ↑ Jackins B. D., Blank R. S., (2005), Special Needs Trust Administration Manual: A Guide for Trustees, iUniverse, New York, p. 85-92
| Duties of trustee — recommended articles |
| Loss adjustor — Corporate trustee — Management rights — Chartered wealth manager — Nominee director — Real estate management — Reliance letter — Authorized person — Agency Broker |
References
- Edwards R., Stockwell N., (2005), Trusts and Equity, Pearson Education, Essex.
- Finlay J., (2012), Trusts, Edinburgh University Press, Dundee.
- Gardner S., (2011), An Introduction to the Law of Trusts, OUP Oxford, Oxford.
- Jackins B. D., Blank R. S., (2005), Special Needs Trust Administration Manual: A Guide for Trustees, iUniverse, New York.
- Kodilinye G., Carmichael T., (2014), Commonwealth Caribbean Law of Trusts: Third Edition, Routledge, Oxon.
- Maitland F. W., (2011), Equity: A Course of Lectures, Cambridge University Press, Cambridge.
- Moffat G., (2005), Trusts Law: Text and Materials, Cambridge University Press, Cambridge.
Author: Fryderyk Olchawa
