General Principles of Fiduciary Duties

Man pointing to signature on document

As a trustee of an irrevocable trust, your role comes with significant responsibilities. One of the primary tasks at hand is to grasp the fundamental principles of fiduciary duty. This duty is the cornerstone of trust administration, guiding trustees in their actions and decisions for the benefit of beneficiaries.

At OC Trial Group, APC, we recognize the importance of educating our clients on fiduciary duty. In this guide, we'll outline the general principles every trustee should understand, helping you navigate your role with confidence and clarity.

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Administering the Trust

First and foremost, trustees must adhere to the terms laid out in the trust instrument. This means carefully reading and understanding the document to ensure proper administration. Your role is to execute the trust's provisions faithfully and responsibly.

Beneficiary's Best Interest

Central to fiduciary duty is the obligation to act solely for the benefit of the trust's beneficiaries. Whether there's one beneficiary or many, impartiality is key. Trustees must treat all beneficiaries fairly and prioritize their interests above all else.

Avoiding Conflicts of Interest

Trustees must steer clear of conflicts of interest that could compromise their impartiality. This includes refraining from serving as trustee for another trust with conflicting interests. Your loyalty must remain with the trust and its beneficiaries at all times.

Preserving Trust Property

Preserving and managing trust assets is another critical duty. Trustees must safeguard the trust property, ensuring it remains productive and separate from personal assets. Additionally, trustees should be proactive in protecting trust assets, including keeping funds in insured accounts to mitigate risk.

Delegating Responsibilities

While trustees generally cannot delegate their duties, exceptions exist for investment and management functions. However, any delegation must be prudent and in the best interest of the trust.

Exercising Reasonable Care

Trustees are held to a standard of reasonable care, skill, and caution in administering the trust. Your actions should mirror those of a prudent person managing a similar enterprise, always aiming to fulfill the trust's purposes as outlined in the trust instrument.

Uniform Prudent Investor Act

The Uniform Prudent Investor Act supplements traditional trustee duties, emphasizing the importance of prudent investment practices. Trustees are required to review trust assets promptly and develop an investment policy statement to guide decision-making. While these duties may seem daunting, resources are available to assist trustees in fulfilling their obligations effectively.

Educating Trustees

Understanding fiduciary duty and the intricacies of trust law can be overwhelming, especially for non-professional trustees. At OC Trial Group, APC, we're committed to supporting our clients every step of the way. We provide comprehensive summaries of relevant statutes and offer guidance to ensure trustees feel empowered in their role.

In conclusion, fiduciary duty forms the bedrock of trust administration, guiding trustees in their responsibilities to beneficiaries and the trust itself. By familiarizing yourself with these principles and seeking guidance when needed, you can fulfill your duties with confidence and integrity. If you have any questions or require assistance, don't hesitate to reach out to the experienced team at OC Trial Group, APC. We're here to help you navigate the complexities of trust administration and safeguard the interests of all involved parties.

About the AuthorBlaine M. Brown

Blaine M. Brown is a co-founder of the OC Trial Group and acts as one of their primary trial attorneys. Mr. Brown is a highly awarded and reviewed trial attorney.