![]() If the trustee disposes of trust property and acquires other property with the proceeds of the sale, the beneficiaries can enforce the trust on the newly acquired property.Īnyone accepting the position of trustee must be aware of its significant responsibilities. If a trustee wrongfully disposes of the trust property, the beneficiaries can recover the property unless it has come into the hands of a bona fide purchaser for value. Beneficiaries, however, and not creditors, are the only parties who can reach the trust property. Beneficiaries’ claims against the trustee are of no higher priority than claims of other trustee creditors. But a dissenting co-trustee must prevent “any serious breach of trust” and must “compel a co-trustee to redress a serious breach of trust.”īeneficiaries can recover improperly distributed trust assets if they are traceable back to the trust. The UTC allows a dissenting trustee to absolve him or herself from liability by documenting such dissent. Under the UTC, co-trustees are required to exercise reasonable care, to participate in the performance of the trustee’s functions, unless they are effectively assigned to another co-trustee, and act by majority decision. When one trustee breached his or her fiduciary duty, the other trustees were required to compel him or her to redress it. At common law, when there were multiple trustees, each had an obligation to participate in trust administration unless otherwise specified. If there are multiple trustees, they carry a dual accountability for their own actions, inactions, and decisions as well as those of their co-trustees. The UTC commentary states that a “trustee may delegate duties and powers that a prudence trustee of comparable skills could properly delegate under the circumstances.” Additionally, the UTC holds the trustee to a standard of reasonable care, skill, and caution when selecting an agent. A trustee could, however, employ agents and attorneys where reasonable under the circumstances. Under common law, the trustee had an affirmative duty not to delegate acts he or she could reasonably be required to personally perform. Evidence of their agreement will help prove that an action was taken in good faith, even if there were negative consequences for the trust. While it will not guarantee protection from liability, a trustee can acquire the beneficiaries’ written consent before they act. The trustee will always have duties, or the trust will become passive and legal title will pass to the beneficiaries. Subsidiary rules include the duty of impartiality (no favoritism between classes of beneficiaries), the duty not to comingle trust property and the trustee’s personal property, and the duty to inform and account to beneficiaries. ![]() The duty of prudence requires that the trustee is held to an objective standard of care in managing the trust property. The duty of loyalty requires that the trustee administer the trust solely in the interest of the beneficiaries. The trustee’s fiduciary duties include a duty of loyalty, a duty of prudence, and subsidiary duties. His or her three primary jobs include investment, administration, and distribution.Ī trustee is personally liable for a breach of his or her fiduciary duties. The trustee must distribute the property in accordance with the settlor’s instructions and desires. Since the trustee holds legal title to the trust property, he or she owes fiduciary duties to the beneficiaries who hold equitable title. A trust will not fail for want of a trustee. ![]() Once accepted, the trustee cannot resign without the consent of all of the beneficiaries or the court. The trustee must voluntarily accept his or her position. The trustee is either appointed by the settlor or the court if the settlor failed to appoint someone, or if the appointed trustees fail. The trustee manages the trust’s assets, a significant responsibility.
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