Trustee selection for your trust

Choosing the right trustee is a key element to success.  There are 13 distinct duties that a trustee must follow.  When choosing a trustee you should ask yourself if the person or institution you are considering to name as your trustee can perform each of these duties.

Trustee Duties

1. Duty to administer a trust by its terms. – A trustee must be able to follow the directions of the trust.
2. Duty of skill and care. – Even if an amateur is named a high standard of performance is required.
3. Duty to give notices. – Notices may concern legal rights of the beneficiaries that must be communicated.
4. Duty to furnish information and to communicate. – The trustee has to keep the beneficiaries informed.
5. Duty to account. – A written accounting must be provided to the beneficiaries regularly.
6. Duty not to delegate. – A trustee may employ professionals to assist but retains supervisory responsibility.  The exercise of judgement and discretion cannot be delegated.
7. Duty of loyalty. – The trustee is administered for the benefit of the beneficiaries.
8. Duty to avoid conflict of interest. – The trustee should avoid engaging in transactions with the trust unless authorized by the trust.
9. Duty to segregate trust property. – Trust assets must not be commingled with non-trust assets.
10. Duty of impartiality. – Every beneficiary should be treated equally unless the trust directs that providing for a particular beneficiary is a principal purpose.
11. Duty to invest. – Trust assets must not be left idle.  The trustee has a duty to diversify the investments and develop an asset allocation plan.
12. Duty to enforce and defend claims. – Steps must be taken to protect the trust from adverse claims.
13. Duty of confidentiality. – Terms of the trust and identities of beneficiaries and their interests cannot be disclosed except to the beneficiaries and those who need such information in order to be able to administer the trust.

Retrieved from: Regions Trust Update, January 2010 issue.