Trustee Duties – be sure you are performing all of them?
Fiduciary obligations of a trustee have been considered and addressed by the courts (over many centuries) and more recently within legislation also. They confirm how a trustee should act when administrating a trust.
An often little considered (and easily overlooked) duty is the duty not to fetter one’s discretion as a trustee.
The duty requires the trustee not to bind oneself now to make a decision in the future in a certain manner. Trustees ought to keep, as far as possible, their discretion open and unfettered.
If a trustee with full discretion enters into a contract or legally binding agreement that forces him or her to act in a particular way or, if he or she decides now how they will exercise their power in the future, such a decision will likely be a breach of their duty to act in an unfettered way. A party, normally a beneficiary, can then challenge the trustee’s action.
Exceptions can be:
Statutory exceptions – most state trustee acts have exceptions;
Delegation that is allowed under the trust deed or instrument; and
Court order – the Supreme Court in all states has powers to regulate the affairs of a trust.
Trustees can appoint agents to perform certain tasks, for example appointing tax agents to ensure its obligation under the tax legislation are met.
(Who’d be a trustee??)
Senior Solicitor/Associate Director