Understanding the Fiduciary Duties of a Trustee

Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

If you have been named as Trustee or Successor Trustee of another’s Irrevocable Trust, you may be wondering what exactly the role entails. For Successor Trustees, your duties will not begin until the current Trustee is no longer able or willing to perform in that capacity. However, if you are currently serving as Trustee, there are some things you need to know.

In Nebraska and the 30 other states that have enacted the Uniform Trust Code[1], a Trustee is tasked with the following duties[2] (among many others):

  1. Duty to Administer Trust
  2. Duty of Loyalty
  3. Impartiality
  4. Prudent Administration

Duty to Administer Trust

The primary duty of a trustee is to follow the terms and purposes of the trust. When the terms of a trust are silent or if it does not address a particular issue, a trustee must use good faith when administering the trust.

Duty of Loyalty

A trustee owes a duty of loyalty to the beneficiaries. Expressed in a different manner, a trustee must not place the trustee’s own interests over those of the beneficiaries. Most violations of the duty of loyalty concern transactions involving the trust property, but breaches can also take other forms. For example, a trustee administering a trust owning a personal residence cannot receive a commission from an insurance agent for the procurement of a homeowner’s insurance policy for the home owned by the trust.

Impartiality

If a trust has two or more beneficiaries, the trustee is required to act impartially in investing, managing, and distributing trust property, taking into account the respective interests of each beneficiary. The duty to act impartially does not mean the trustee must treat all beneficiaries equally. Rather, they must be treated with respect to the terms and purposes of the trust.

Prudent Administration

The trustee is held to the prudent person standard when administering a trust and must exercise reasonable care, skill, and caution. That is, a trustee must act as prudent person would, by considering the purpose, terms, distributions, and other relevant provisions of the trust.

For additional information on your duties as Trustee, contact your Wealth Advisor, a member of the Wealth Enhancement Group or your estate planning attorney. Also, click here to watch our Executor Planning Checklist video.

Share:
facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.
Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

RECENT POSTS

Senate Addresses Taxes, Deficit, Inflation, Health Care in Proposed Bill

By Jamie Hopkins, Managing Director, Wealth Services  Sonu Varghese, Director, Investment Platforms; and Ryan Detrick, Chief Market Strategist, contributed to this report.    Senate Democrats have reached a general agreement on a bill to address climate change, taxes, health care, inflation …

Quarterly Market Outlook: What Lies Ahead for the Third Quarter of 2022?

By Scott Kubie, Senior Investment Strategist    The first half of the year proved challenging for even the most hardened of investors. High inflation. Continual losses in the S&P 500. Bear market. Fed rate hikes. It all added up to the third most volatile market in 25 years.  

Culture From the Top Down: Executive Compensation Plans Explained

By Craig Lemoine, Director of Consumer Investment Research At their most basic level, executive compensation plans are designed to attract, retain and motivate top talent and leadership. But truly successful plans are designed to be much more than providing a high salary to a key employee – …

What Do Financial Adviser Designations Mean? What are the Letters after a Name?

By Craig Lemoine, Director of Consumer Investment Research  We speak a secret language in financial planning. So much of our world is filled with abbreviations surrounding insurance and investment products, processes, education and accomplishments.  I could say “Tammy, a CLU and ChFC®, revi …
1 2 3 4 88 89 90

Get in Touch

In just 15 minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.

Schedule a Consultation