Trustees serve a very important role in the effective administration of a trust. The maker of the trust document, the grantor, gives another neutral third party, the power to administer the terms of the trust throughout the lifetime of the grantor and after, if the terms of the trust provide so. The trustee is essentially in charge of managing all the assets of the trust, without taking an interest in them. While a trustee can also be the maker of the trust, many people elect another individual, or a corporate trustee to continue administering the trust upon their death.
There are some express terms that a trustee must follow, such as:
- Keeping separate the investments and accounts of the trust,
- Not mixing the assets of trustee with those of the trust,
- Not using the trust assets for the trustee benefit,
- Treating all beneficiaries fairly,
- Developing an investment plan in a prudent manner in a way that will minimize risk and maximize growth,
- As well as keeping accurate records of transactions of the trust.
Power to Revoke
Trustees have a duty to act in a reasonably prudent manner, and their failure to do so results in a breach of their fiduciary duties. Some trusts will grant the power to revoke, subject to specific conditions, while if the power to revoke appointment is not expressly reserved in the trust, then the power does not exist. For irrevocable trusts, the power of revocation is ineffective, while for revocable trusts, the power of revocation is discretionary and a decision to be made by the grantor or beneficiary. Courts will use their discretion to allow for trust modification by the trustee to deviate from the written terms whenever changed circumstances are unforeseen and impair the ability to effectively carry out the trust’s purpose.
As a beneficiary of the trust, depending on the terms of the trust and the rights of the beneficiaries, they may be able to revoke the appointment of the trustee and to appoint a new trustee. All beneficiaries must agree in the request to the trustee or the court petition to modify or revoke the trust and this decision for revocation will not defeat a material purpose set out by the settlor when he intended on making the trust.