The duties of a Trustee (including initial trustees and successor trustees) are numerous, but first and foremost, the Trustee is a fiduciary and is charged with implementing the trust he/she oversees. As a fiduciary, that means that the Trustee owes certain duties to the beneficiaries of the Trust and must act only in their best interests (i.e. the Trustee cannot act in a self-interested manner). “Implementing the trust” means that the Trustee must be absolutely familiar with the terms of the trust and follow those terms meticulously. Where the language of the trust is difficult to understand, or where the trust is complicated, the Trustee must obtain proper professional assistance so that, at all times, the trust is being followed.
The recently enacted Arizona Trust Code specifies the duties owed by a Trustee. See A.R.S. 14-100101, et seq. Besides the duties listed above, some other important duties/responsibilities a trustee should be aware of include:
- Duty of loyalty to each and every beneficiary of the trust.
- Duty to act impartially towards the beneficiaries
- Duty to act prudently
- Responsibility to keep detailed and accurate records regarding trust assets and actions taken in regards to the trust
- Responsibility to enforce trust claims
- Responsibility to collect trust assets
- Duty to keep beneficiaries informed
- Duty to comply with the Prudent Investor Rule
- Duty to act in good faith
Should the trustee breach any of these obligations, the Arizona Trust Code specifies a range of remedies. Among them, the trustee may be liable for losses suffered by the trust, may be removed as trustee, or may be denied compensation.
The bottom line is that if you are a Trustee, you need to use common sense, be diligent and fair, get help when needed, and keep detailed records.