Does a successor trustee have specific duties?
A successor trustee of a trust has several specific duties:
- Duty to administer the trust by its terms: The trustee is required to follow the instructions left by the trust maker in the trust document. The trustee is required to follow the trust language.
- Duty of skill and care:
- Duty to give notices to the beneficiaries and interested parties.
- Duty to furnish information and communicate with the beneficiaries.
- Duty to account to the beneficiaries: The successor trustee must account to the beneficiaries periodically. Generally, the trustee must provide an accounting to the beneficiaries at least once per year. The probate code lists what is required in an accounting.
- Duty not to delegate.
- Duty of loyalty to the beneficiaries: The trustee must administer the trust solely for the interest of the beneficiaries and avoid acting in ways that benefit the trustee at the expense of the beneficiaries. If the trustee personally purchases trust property, the trustee may violate this duty. Similarly, if the trustee sells trust property to an entity in which the trustee has an interest, it may violate the duty of loyalty. Further, a trustee may violate the duty of loyalty if the trustee make a loan from trust property to the trustee personally.
- Duty to avoid conflicts of interest.
- Duty to segregate trust property from the successor trustee’s personal property: The successor trustee must keep the trust’s assets separate from the successor trustee’s personal assets. This means that the successor trustee has to manage the trust bank accounts separately. The trustee can’t deposit trust funds into the successor trustee’s personal bank account, unless the successor trustee has made a distribution of assets to the beneficiaries.
- Duty of impartiality: The trustee can’t favor one beneficiary over another beneficiary.
- Duty to invest trust assets: The trustee must invest trust assets to make the assets productive. The trustee generally can’t allow trust assets to sit idle.
- Duty to enforce and defend claims against the trust: The trustee is the party who can bring a lawsuit on behalf of the trust, such as to collect on a debt or obligation owed to the trust. The trustee also can defend the trust, if someone sues the trust.
- Duty of confidentiality.
These duties are in addition to the general duties of the successor trustee.