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What it Means to be a Trustee – A Guide for Clients

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What it Means to be a Trustee – A Guide for Clients

General duties of a Trustee

A trustee stands in a special relationship of fiduciary responsibility to the grantor of the trust and to the beneficiaries. In carrying out his or her fiduciary duties, the trustee must be mindful of that unique relationship. The starting point is the trust instrument and its specification of what the trustee is to do to accomplish the purposes for which the trust has been established. For example in the case of the simplest trust disposition, the instrument might state that the trustee is to hold and invest the assets, to pay net income to beneficiary #1 for life and then to distribute the remainder to beneficiary #2. Beyond that, certain duties are imposed on trustees by state law. The emphasis on a particular duty may depend on the purpose for which the trust was created. In the rest of this section are general descriptions of basic categories of a trustee’s typical duties, prescribed by the trust instrument and governing law.

Duty to Administer Trust by Its Terms. The trustee is obligated to administer the trust strictly by its terms. The trustee must be guided in all acts by the trust instrument, including any amendments, and, unless there is an absence of direction or ambiguity, must be limited by the intent apparent from the face of the trust instrument. Therefore it is critical that the trustee read and understand the entire trust instrument. To the extent the trustee needs guidance in interpreting the terms of the trust, he or she should seek advice from a qualified attorney.

Duty of Skill and Care. The laws of most states require that a trustee administer the trust with the care, skill, prudence and diligence that a person familiar with the job of serving as a trustee would use in the conduct of the trust’s activities to accomplish the purposes of the trust. Thus, even if a trustee has never previously served in such a capacity, he or she will be held to a high standard of performance.

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