<img alt="" src="https://secure.mass1soma.com/153281.png" style="display:none;">

Understanding Trustee Duties

Understanding Trustee Duties

Understanding Trustee Duties-1

In a previous blog post we discussed how a trust is created when a settlor transfers assets to a trustee to hold for the benefit of one or more beneficiaries. Today we shall examine in greater detail the role of the trustee with particular emphasis on the duties and obligations imposed on a trustee by law or agreement.  

There are significant duties imposed on a trustee by law which are fiduciary in character. The office of trustee is therefore onerous and not to be undertaken lightly. It is important to note that a trustee’s legal duties are subject to contrary agreement. The terms of the relevant trust deed may impose additional or more onerous obligations on the trustee or may relieve it of certain duties altogether.

Some of the duties imposed by operation of law are as follows:

Duty To Ascertain The Nature Of The Trust

On accepting appointment to the trust, the trustee must carefully inspect the trust instrument to ascertain and understand the powers conferred and obligations imposed. 

The trustee must identify the property subject to the trust and ensure that such property is transferred to it and registered in its name. The trustee has a further duty to safeguard trust assets and, where appropriate, should ensure that they are properly insured. Trust assets must be held separately from any assets the trustee holds in its own capacity.

Duty To Account 

The trustee has a duty to maintain clear and accurate financial records and accounts. These must be made available to the beneficiaries on request.

Duty To Act In the Best Interests Of The Beneficiaries 

The trustee has a fiduciary duty to act in the best interests of the beneficiaries at all times. This may involve balancing competing interests and in this regard the trustee must act in an impartial and objective manner. Trust assets must be distributed to the beneficiaries strictly in accordance with the terms of the trust instrument.  

Duty To Act With Due Care 

A trustee is obliged to exercise the standard of care that an ordinary, prudent man would exercise in the management of his own affairs, applying any special knowledge he may have. Courts may expect a higher standard of care from professional trustees than from unpaid trustees. 

Advice For Trustees

The duties and obligations imposed on a trustee may be significant and onerous. Trustees should always exercise the utmost of caution in fulfilling the duties imposed on them, whether by operation of law or by the specific terms of the trust deed. Failure to do so may result in an allegation of breach of trust. Care should always be taken to review and understand the terms of the relevant trust instrument and the fiduciary duties imposed by law. Specialist advice should be sought where appropriate. 

New Call-to-action

A Guide to Trust Protectors
Read More
Why You Should Put Your Trust In A Discretionary Trust
Read More
Discretionary Trusts For Children With Special Needs
Read More
Ireland Guides On Company Ownership Tax Breaks
Read More

 Blog Comments