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Duties of Trustee

As obvious as it may sound, a trustee’s basic duty is one of trust.  Specifically, a trustee must act with honesty, good faith, and prudence in administering the trust and exercise a high degree of loyalty toward the trust beneficiary.  The standard of care is the degree of care a prudent person would exercise in his or her personal affairs.  The duty of loyalty requires that the trustee act in the exclusive interest of the beneficiary. A trustee must keep clear and accurate accounts of the trust’s administration and furnish complete and accurate information to the beneficiary while keeping trust assets separate from his or her own assets.  A trustee also has a duty to pay to an income beneficiary the net income of the trust assets at reasonable intervals.  In addition, a trustee has a duty to distribute the risk of loss from investments by reasonable diversification and a duty to dispose of assets that do not represent prudent investments.  Investments in federal, state, or municipal bonds; corporate bonds; and shares of preferred or common stock may be prudent investments under particular circumstances.

Inside Duties of Trustee