Trustee
Wills, trusts and estates |
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Sections Property disposition |
Trusts |
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Trustee (or the holding of a trusteeship) is a
A
General duties of trustees
Trustees[2] have certain duties (some of which are fiduciary). These include the duty to:
- Carry out the expressed terms of the trust instrument.[3] Trustees are bound to act in accordance with the terms of the trusts upon which the trustee holds trust property, and commit a breach of trust by departing from the terms of the trust.[4] However, a trustee may act otherwise than in accordance with the terms of the trust if all beneficiaries, being sui juris and together absolutely entitled, direct the trustee to do so (or so consent). If any question arises as to the constriction of the provisions of the trust, the trustee must approach the court for determination of the question.
- Defend the trust
- Prudently invest trust assets (in New South Wales, this is mandated by the Trustee Act 1925 (NSW)[5]).
- Be impartial among beneficiaries: the trustee must act impartially between individual beneficiaries[6] as well as between different classes of beneficiaries.
- Account for actions and keep beneficiaries informed: these include a duty to inform beneficiaries as to their entitlements under the trust[7] and other matters concerning the trust. Trustees do not have priority right to trust documents; it is a personal right and cannot be assigned[8] The right to seek disclosure of trust documents is an aspect of the court's inherent jurisdiction to supervise the administration of trusts.[9] As trustees as not under a duty to disclose their reasoning in applying a trust power (unless the trust instrument requires otherwise), there is no duty to disclose any documents dealing with the decision making promise.[10] Protection of confidentiality has been described as 'one of the most important limitations on the right to disclose of trust documents'. 'Memoranda or letter of wishes' do not necessarily need to be disclosed to a beneficiary if they are of a number of potential beneficiaries.
- Be loyal
- Not delegate
- Not profit; however, may charge fees for services to the Trust [11]
- Not be in a conflict of interest position
- Administer in the best interest of the beneficiaries
The modern interpretation of fiduciary duty requires the consideration of environmental, social, and governance (ESG) factors as these are long-term investment value drivers.[12] When evaluating whether or not an institutional investor has delivered on its fiduciary duties, both the outcomes achieved and the process followed are of critical importance.
The terms of instrument that creates the trust may narrow or expand these duties—but in most instances, they cannot be eliminated completely. Corporate trustees, typically trust departments at large banks, often have very narrow duties, limited to those the trust indenture explicitly defines.
A trustee carries the fiduciary responsibility and liability to use the trust assets according to the provisions of the trust instrument (and often regardless of their own or the beneficiaries' wishes). The trustee may find himself liable to
Trustees are generally held to a "prudent person" standard in regard to meeting their fiduciary responsibilities, though investment, legal, and other professionals can, in some jurisdictions, be held to a higher standard commensurate with their higher expertise.[13]-Trustees can be paid for their time and trouble in performing their duties only if the trust specifically provides for payment. It is common for lawyers to draft will trusts so as to permit such payment, and to take office accordingly: this may be an unnecessary expense for small estates.
In an exception to the duties outlined above, sabbatical officers of students' unions who are also trustees of these organisations they work for do have the right to a salary (and hence profit from their being a trustee). This is an exception explicitly granted in the 1993 act[14]
Other uses
The broadest sense of the term trustee applies to someone held to a fiduciary duty similar in some respects to that of a trustee proper. For example, the directors of a bank may be trustees for the
Charities in the United Kingdom
In the case of UK
The law on this in England changed considerably with the Charities Act of 2006. An account of the main changes can be found in "Charities Act 2006: A guide to the new law" by Michael King and Ann Phillips[
One is the traditional way in which a corporation is a corporate trustee of a given charity. The second is the new way, in which the charity itself is incorporated as a CIO[clarification needed]. The advantages and disadvantages of the different methods is a complicated matter. According to King and Philips, many of the advantages of incorporating as a CIO are obtained if the trustees are not individuals but a corporate entity.[citation needed]
Local government in the United States
Depending on the state, a trustee is a member of the village board of trustees, which is a village's elected
In some states, a
Bankruptcy trustee
In the United States, when a consumer or business files for bankruptcy all property belonging to the filer becomes property of a newly created entity, the "
Chapter 7 trustees in bankruptcy are chosen by the United States Trustee from a panel, and are known as panel trustees. Every judicial district has a permanent Chapter 13 trustee, known as a "standing trustee". As cases under Chapter 12 (for family farmers or fishermen) are filed fairly infrequently, the United States Trustee usually makes trustee appointments in such cases on an ad hoc basis.
UK legislation
- Trustee Delegation Act 1999 specifically covers matters to do with land.
- Trustee Act 1925
- Trusts of Land and Appointment of Trustees Act 1996
- Trustee Act 2000
- Charities Act 1993
United Nations
See also
References
- ^ ISBN 0-8299-2041-2.
- ^ "The New Palgrave Dictionary of Economics and the Law, Definition of "fiduciary duties" by Tamar Frankel Vol.2, p.127-128". Harvard Edu. Archived from the original on 2011-09-03. Retrieved 2011-09-08.
- ^ Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15, (2003) 212 CLR 484 (3 April 2003), High Court (Australia).
- ^ Breen v Williams ("Medical Records Access case") [1996] HCA 57, (1996) 186 CLR 71 (6 September 1996), High Court (Australia).
- ^ Trustee Act 1925 (NSW) ss14, 14A & 14C.
- VLR 401 (2 April 1948), Supreme Court(Vic).
- ^ Hawkesley v May [1956]
- ^ Global Custodians v Mesh [2002]
- ^ Schmidt v Rosewood Trust [2003]
- ^ Tierney v King [1983]
- ^ Case law authority Keech v Sanford [1726] EWHC Ch J76 [1] Archived 2015-05-12 at the Wayback Machine
- ^ PRI, UNEP FI, & The Generation Foundation. Fiduciary Duty in the 21st Century Archived 2018-02-20 at the Wayback Machine. 2018
- ^ see: Speight v Gaunt [1883] EWCA Civ 1 [2] Archived 2021-04-18 at the Wayback Machine
- ^ "CC3 – The Essential Trustee: What you need to know". Charity-commission.gov.uk. 2008-04-01. Archived from the original on 2012-02-28. Retrieved 2012-03-05.
- ^ Text of the Charities Act 1993 as in force today (including any amendments) within the United Kingdom, from legislation.gov.uk.
Further sources
- Fontaine, C. CLU, ChFC (2004) Fundamentals of Estate Planning. The American College Press.
- Trustee Act 2000 Summary