Duties of a Trustee

The Offices of Grant Morris Dodds

The first duty of the Trustee is to honor and Carry out the intentions of the settlor or the trust as provided for the in the trust agreement.  Almost all rules of the rules of trust law are default rules that the settlor can “alter or abrogate.”[i]  Beneficiaries of a trust can also excuse the performance of a trust when all are “capable and not misinformed” under traditional trust law.[ii]Trustee Duties.  Other duties of the Trustee are as follows:

Duty of Loyalty.  Under a Duty of Loyalty, a trustee who invests and manages trust property owes a duty to the beneficiaries of the trust to manage and invest such property solely in the interests of the beneficiaries while complying with the prudent investor rule as codified in the Uniform Prudent Investor Act (UPIA) (NRS 164.700 – 164.775).[iii]

Within a reasonable time after accepting a trusteeship or receiving trust property, the trustee has a duty to review the trust property and make and carry out decisions concerning the retention and disposition of assets in order to bring the trust portfolio into compliance with the purpose, terms, requirements for distribution and other circumstances of the trust, and with the requirements of the UPIA.[iv]

Duty to Use Special Skills.  A trustee who has special skills or expertise, or is named trustee in reliance upon the trustee’s representation that he or she has special skills or expertise, has a duty to use those special skills or expertise.[v]  Other duties provided for in the Uniform Prudent Investor Act (1994):

Duty to monitor: the trustee’s continuing responsibility for oversight of the suitability of investments already made as well as the trustee’s decisions respecting new investments.

Duty to investigate: the responsibility of the trustee to examine information likely to bear importantly on the value or the security of an investment, i.e. audit reports or records of title.

Duty of Impartiality: applies when there are two or more beneficiaries of a trust.  Discussed in more detail below.

A trustee is not liable to a beneficiary to the extent that the trustee acted in reasonable reliance on the terms of the trust.[vi]

Notice of Proposed Action: Under Nevada law, a trustee is authorized to submit a Notice of Proposed Action in matters relating to: (a) Circumstances under which the trustee is authorized to appoint property of one testamentary trust or irrevocable trust to another trust pursuant to NRS 163.556[vii] or (b) trustee actions permitted by UPIA and UPAIA.

A trustee provides a Notice of Proposed Action by mailing notice to every adult beneficiary who receives, or is entitled to receive income under the trust or would be entitled to receive principal if the trust were terminated.

Notice must provide the following: (a) notice is provided pursuant to NRS 164.725; (b) the name and mailing address of the trustee; (c) the name and telephone number of a person with whom to communicate for additional information regarding the proposed action; (d) a description of the proposed action and an explanation of the reason for taking the action; (e) the time within which objection to the proposed action may be made, which must be not less than 30 days after the notice of proposed action is mailed; and (f) the date on or after which the proposed action is to be taken or is to be effective.

If no beneficiary objects to the Proposed Notice of Action, the trustee is not liable to any present or future beneficiary with respect to the proposed action.[viii]

Schedule a free consultation with our 5-star rated attorneys at Grant Morris Dodds for further details.