Also known as: trustee duties · trustees’ duties · trustee duty · fiduciary duties · trustee obligations
Written by attorneys · grounded in primary & secondary sources — see below
Fiduciary obligations imposed on a trustee to administer the trust solely in the interest of the beneficiaries. These obligations include the duty against self-dealing, the duty not to commingle trust assets, and the duty not to delegate discretionary functions.
Tara Tran served as trustee of a family trust that previously represented both the insurer and injured relatives in litigation. When one former client became a defendant in a related uninsured-motorist claim, the successor trustee discovered that Tara still held confidential information from the joint representation. The court disqualified Tara from continuing as trustee because her prior fiduciary duties created a non-consentable conflict.
Tabitha Taylor created an inter vivos trust naming herself as trustee and retaining broad powers to distribute principal to herself for any reason. After her death the executor argued the retained powers caused the trust corpus to be included in her estate. The court held that the powers were so extensive that Tabitha had not relinquished dominion, violating her duty to separate her personal interests from those of the beneficiaries.
Select any source to read its text and confirm it supports the definition.
Tonya Takahashi designated her spouse as beneficiary of an ERISA-governed life insurance policy and pension plan. After divorce a state statute automatically revoked the designation. The court held the state law was preempted because it interfered with the plan administrator's fiduciary duty to follow the plan documents and distribute benefits according to the named beneficiary.
Thaddeus Tran and Tiffany Torres formed a joint venture to lease and renovate a hotel. Tran learned of an adjacent property that would greatly enhance the venture's value but took the lease in his own name without informing Torres. The court held that Tran breached the duty of loyalty by failing to offer the opportunity to the venture first, requiring him to account for the profits as constructive trustee.
A trustee must administer the trust solely in the beneficiaries' interest. This includes the duty against self-dealing, the duty not to commingle assets, and the duty not to delegate discretionary functions.
Supporting sources
A trustee's retained power to distribute principal to herself for any reason prevents the trust corpus from being excluded from her estate. The power must be so broad that the settlor-trustee never relinquished dominion and control.
Supporting sources
A state statute that automatically revokes a beneficiary designation upon divorce is preempted by ERISA. The plan administrator must follow the plan documents to discharge its fiduciary duty of following the named beneficiary.
Supporting sources
A co-trustee who learns of an opportunity that would benefit the trust and takes it personally must account for the profits as a constructive trustee. The duty of loyalty requires the opportunity to be offered to the trust first.
Supporting sources
…There were to be certain pre-emptive rights for each in the contingency of death. The two were coadventurers, subject to fiduciary duties akin to those of partners ( King v. Barnes , 109 N. Y. 267). As to this we are all agreed. The heavier weight of duty rested, however, upon Salmon. He was a coadventurer with Meinhard, but…