What You Should Know About the Fiduciary Duties of a Trustee
If you appoint a trustee to assist in some manner with your estate planning, it is important to understand the fiduciary duties of a trustee. A trustee has a fiduciary relationship with the trust beneficiaries. The relationship imposes duties on the trustee that are subject to a high standard of trust, performance and responsibility. Thus, in appointing a trustee, you should select someone you can trust to carry out your wishes and communicate effectively with your beneficiaries. A trustee’s failure to uphold his or her responsibilities creates immediate legal conflicts and can frustrate the plan you have put in place. While no one can predict the future, working with someone you trust who also understands and accepts the role played by a trustee can minimize the risk that your loved ones will be at the center of conflict down the road.
Duty of Care
In the process of administering a trust, an Arizona trustee can exercise all powers outlined under the trust agreement as well as any additional powers permitted by law and needed to accomplish the purposes of the trust. The duty of care requires exercising these powers as would a prudent individual dealing with his own property. The duty of care also requires the trustee to administer the trust in good faith.
Duty of Loyalty
In addition to the duty of care, a trustee also has a duty of loyalty to the beneficiaries of the trust. This means that the trust needs to be administered as directed by the trustor and solely in the interests of the beneficiaries. Self-dealing transactions, for example, are prohibited.
A trustee also has a responsibility to enforce claims of the trust and defend the trust from any claims brought against it. The trustee is also responsible for informing the beneficiaries concerning the assets and income of the trust.
Consulting with a knowledgeable estate-planning attorney can help you identify a proper trustee for your trust.
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Fiduciary Duties of a Trustee or any other estate planning matters, please feel free to contact Stephen L. West at 480.461.5341,or Curtis M. Chipman at 480.461.5329. You can also log on to udallshumway.com, or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.