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

Carson Investment Research’s Outlook ’23: The Edge of Normal

At long last, The Carson Investment Research team is proud to officially release our 2023 Market and Economic Outlook, aptly titled Outlook ’23: The Edge of Normal. You can download the whitepaper here. As you are all painfully aware, 2022 wasn’t pretty for investors – it was the first year …

What Documents You Should Provide to Your Tax Preparer

Mike Valenti, CPA, CFP®, Director of Tax Planning Tom Fridrich, JD, CLU, ChFC®, Senior Wealth Planner It’s January, so it’s officially tax season! One of the most common client questions heard by tax preparers is, “So, what do you need from me?” The short answer to that question is often, “ …

Planning for Your First Required Minimum Distribution in Retirement

Mike Valenti, CPA, CFP®, Director of Tax Planning Qualified retirement plans – such as 401(k)s, 403(b)s and IRAs – offer clear tax advantages. Traditional 401(k)s, 403(b)s, and IRAs offer a tax deferral on contributions and growth until distribution. Their Roth counterparts can provide an i …

How to Leverage Tax-Advantaged Accounts in 2023

Kevin Oleszewski, CFP®, MST, EA, Senior Wealth Planner  As you’re setting your new year’s goals, one that should top everyone’s list is increasing your savings. After all, we’ve recently seen inflation at work, reminding us that even everyday essentials can bust budg …
1 2 3 91 92 93

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