What are the powers of the trustee?
trustee can only exercise powers expressly or impliedly conferred
trustee has powers necessary and appropriate to properly invest, manage, and distribute trust property is not contrary to trust terms
How does a trustee accept his appointment?
Rule: Trustee can accept the appointment by:
1. by accepting delivery of the trust property
2. exercising powers as a trustee
3. performing duties as a trustee, or
4. otherwise indicating acceptance of the trusteeship.
What are the duties of the trustee?
- Duty to administer in good faith
- Duty of loyalty > no self-dealing
- Duty to report
- Duty to separate trust property and keep records
- Duty to enforce claims and defense trust
- Duty to preserve property and make it productive/ Duty to diversity the portfolio
- Duty to be impartial
What is the trustee liability?
- A trustee is personally liable on contracts entered into and for tortious acts committed while acting as trustee.
- If the trustee acted within the scope of trustee duties, then the trustee is entitled to indemnification from the trust.
Is a trustee liable if a trust have been revoked or amended?
No, a trustee who does not know that a trust has been revoked or amended is NOT liable to the settlor or settlor’s successors in interest for distributions made and other actions taken on the assumption that the trust had not been amended or revoked.
What is the duty of loyalty?
a trustee has a duty of loyalty to act in the best interest of the beneficiaries.
NO self-dealing
What is the duty of care?
Almost all states have adopted a form of the UPIA. The UPIA states that a trustee must “administer the trust as a prudent person would . . . using reasonable care, skill, and caution.”
A trustee has the duty of being a prudent investor/manager of the trust’a assets. A trustee’s investment and
management decisions with respect to individual assets should be evaluated in the context of the portfolio as a whole
What are the remedies for a breach of trust?
- Suspending or removing a trustee
- decreasing compensation
- compelling a trustee to perform trust duties
- compelling payment of damages, etc.
What is the remedy for a self-dealing case?
the trust beneficiaries may rescind the transaction and ask for the self-dealing purchase to be set aside (the trust property is returned to the trust and the amount paid is refunded by the trust) or recover any profits the trustee made by reason of the breach.
