Duties of a Trustee

A trustee's duties are determined by the trust instrument, common law, and state statutes. A trustee's basic duties are to hold the assets of the trust, to administer them solely for the benefit of the trust beneficiaries and to carry out the terms of the trust instrument. A trustee's duties include the following:

(1.) Duty of loyalty. The trustee must act with undivided loyalty and solely in the interests of the trust beneficiaries. The trustee must act in a manner that avoids placing the trustee's personal interests in conflict with those of the beneficiaries.

(2.) Duty of care. The trustee must act with the same level of care and diligence in carrying out the purposes of the trust as would a person familiar with the role of a trustee. If a trustee holds itself out as a professional trustee or as having special skills, it may be held to a higher standard of care.

(3.) Duty to administer the trust by its terms. The trustee is bound to administer the trust as it is written. If the trust instrument contains ambiguities, it may be necessary to seek help from a court or attorney.

(4.) Duty of impartiality. The trustee is required to treat all of the beneficiaries of the trust impartially, unless the trust instrument provides otherwise. “Impartially,” however, does not necessarily mean “equally.”

(5.) Duty to segregate property. The trustee must not commingle the trust property with the trustee's own property or other property not held by the trust. Absent statutory authority or authority under the trust instrument, the trustee should not even commingle assets of separate trusts created under the same trust instrument.

(6.) Duty to preserve trust property. The trustee is under a duty to use reasonable care and diligence in preserving and protecting trust property for the benefit of the beneficiaries. Thus, for example, a trustee may be required to maintain fire and casualty insurance for any buildings owned by the trust.

(7.) Duty of confidentiality. The trustee is bound to keep personal information about the trust beneficiaries while acting as trustee confidential, and should not reveal details of the trust to third parties (including other beneficiaries), except where otherwise required by law.   

(8.) Duty to keep records. The trustee must keep detailed records showing the assets, liabilities, receipts, and disbursements of the trust.

(9.) Duty to account. The trustee must periodically give a written report to the beneficiaries describing how the trust is being administered. The form and frequency of the accounting varies from state to state.

(10.) Duty to furnish information and communicate. In addition to any written accountings, the trustee is required to keep beneficiaries informed regarding the trust and its administration. The trustee should also furnish other information to a beneficiary that is reasonably requested.

(11.) Duty to enforce and defend claims. The trustee is under a duty to enforce any claims the trustee may have, including against a predecessor trustee, and to defend claims brought against the trust. However, the trustee can also compromise claims if it is the best interests of the beneficiaries to do so. The trustee should consider the economics of suing or defending in making these decisions.

(12.) Duty not to delegate. In general, a trustee is not allowed to delegate the trustee's discretionary (as opposed to ministerial) powers. State law, and possibly the terms of the trust instrument, can vary this duty.

All of these duties are owed to all of the beneficiaries of the trust. Troubles for a trustee often arise when some of the beneficiaries are not treated impartially or kept informed of the trustee's actions, or are not even informed of the existence of a trust.