Trustee Duties & Responsibilities
What is it?
A trustee is a fiduciary—someone legally obligated to act in the best interests of the beneficiaries, not themselves. Key duties include: the duty of loyalty (no self-dealing), duty of prudence (reasonable care in decisions), duty to diversify investments, duty of impartiality (balance between beneficiaries), duty to account (keep records and report), and duty to administer (follow trust terms).
Why is it important?
Understanding trustee duties is crucial whether you're serving as trustee, selecting one, or are a beneficiary. Trustees can be personally liable for breaching these duties. Conversely, trustees acting in good faith within their authority are protected. Clear documentation, professional advice when needed, and transparent communication with beneficiaries are hallmarks of good trusteeship.
Example Language
The Trustee shall administer this Trust solely in the interests of the beneficiaries. The Trustee shall exercise the care, skill, prudence, and diligence that a prudent person acting in a like capacity would exercise. The Trustee shall diversify investments unless special circumstances indicate otherwise.