Trust Administration Flashcards
If a trustee’s powers are express, which 3 sources may they come from?
- From the settlor/trust instrument
- Under statute
- Decreed by Court
Why would a trustee need implied powers?
To carry out necessary or appropriate terms of the trust.
E.g. power to sell trust property, incur reasonable expenses etc.
If there are multiple trustees, do they need unanimous consent to take action?
No, majority can act
In terms of a Trustee’s liability for abuse, in what circumstances will the trustee be considered to be in breach of their duties?
Only if their decision was an abuse of discretion or if trustees failed to exercise discretion
Can a trustee have absolute discretion?
No, a trustee’s actions are still reviewable by a court.
If a court reviews a trustee decision and decides that they would have made a different one, could the trustee be liable for breach of their duties?
Generally no, there needs to be an abuse of discretion, rather than the court would have made a different decision.
To whom does the trustee owe their duties?
It depends on whether the trust is revocable or irrevocable.
Revocable Trust = trustee owes duties exclusively to Settlor
Irrevocable Trust = trustee owes their duties to all Beneficiaries
Broadly, which 10 duties does the Trustee owe?
- To administer the trust in accordance with the terms
- Duty of Loyalty
- No self-dealing
- Keep accurate records
- General Standard of Care
- Investor Standard of Care
- Review Property
- No Social Investing
- Impartiality
- Delegation
What does the duty of no-self dealing mean?
Except for compensation, Trustee (and close friends/family) cannot personally benefit fro their position.
A trustee acts in good faith and fairly to buy trust property for themselves. Is this permissible?
No, self-dealing is never acceptable, even if the trustee acts in good faith or fairly.
If the trustee does breach the duty not to self-deal, can they still benefit from the deal?
Any benefit will be credited to the trust.
Does the trustee have to render accounts and information to the trust beneficiaries automatically or on a periodic basis?
In most States, the trustee need only render accounts if the beneficiary OR court demands it.
What does it mean for the Trustee to act with a General Standard of Care?
They must use the CARE and SKILL of a prudent person.
In practice, when might a trustee fall short of the General Standard of Care?
Co-mingling trust property
Not insuring property
Failing to record deeds/title.
What is the Investor Standard of Care?
Trustee must act as a PRUDENT investor.
