(a) Except as otherwise provided by the terms of the trust, the trustee shall observe the standards in dealing with the trust assets that would be observed by a prudent person dealing with the property of another, and if the trustee has special skills or is named trustee on the basis of representations of special skills or expertise, the trustee is under a duty to use those skills.
(b) Whenever the terms of a trust direct that an advisor, rather than the trustee, shall have authority for certain fiduciary actions, the standard of care and performance for actions that are within the scope of the advisor's authority under the terms of a trust shall be as follows:
(1) Where one or more persons are given authority by the terms of a trust, and accept this authority, to direct, consent to, or disapprove a trustee's actual or proposed investment decisions, distribution decisions, or any other decision of the trustee, those persons shall be considered to be advisors and shall have the duties and obligations of fiduciaries when exercising the given authority, unless the trust provides otherwise;
(2) If a trust provides that a trustee is to follow the direction of an advisor, and the trustee acts in accordance with the advisor's direction, then except in cases of wilful misconduct or gross negligence on the part of the trustee so directed, the trustee shall not be liable for any loss resulting directly or indirectly from any such act;
(3) If a trust provides that a trustee is to make decisions with the consent of an advisor, then except in cases of wilful misconduct or gross negligence on the part of the trustee, the trustee shall not be liable for any loss resulting directly or indirectly from any act taken or omitted as a result of the advisor's failure to provide consent after having been requested to do so by the trustee; and
(4) Whenever a trust provides that a trustee is to follow the direction of an advisor with respect to investment decisions, distribution decisions, or any other decision of the trustee, then except to the extent that the terms of the trust provide otherwise, the trustee shall have no duty to:
(A) Monitor the conduct of the advisor;
(B) Provide advice to the advisor or consult with the advisor; or
(C) Communicate with or warn or apprise any beneficiary or third party concerning instances in which the trustee would or might have exercised the trustee's own discretion in a manner different from the manner directed by the advisor.
Absent clear and convincing evidence to the contrary, the actions of the trustee pertaining to matters within the scope of the advisor's authority, such as confirming that the advisor's directions have been carried out and recording and reporting actions taken at the advisor's direction, shall be presumed to be administrative actions taken by the trustee solely to allow the trustee to perform the duties assigned to the trustee under the trust, and the administrative actions shall not be deemed to constitute an undertaking by the trustee to monitor the advisor or otherwise participate in actions within the scope of the advisor's authority.
(c) For purposes of this section:
“Advisor” includes a protector that has been granted powers and authority by the terms of a trust, including:
(1) The power to remove and appoint trustees, advisors, trust committee members, and other protectors;
(2) The power to modify or amend the trust to achieve favorable tax status or to facilitate the efficient administration of the trust; and
(3) The power to modify, expand, or restrict the terms of a power of appointment granted to a beneficiary by the trust.
“Investment decision” means the retention, purchase, sale, exchange, tender, or other transaction affecting the ownership of or rights in any investment, or the valuation of nonpublicly traded investments.
FindLaw Codes are provided courtesy of Thomson Reuters Westlaw, the industry-leading online legal research system. For more detailed codes research information, including annotations and citations, please visit Westlaw.
FindLaw Codes may not reflect the most recent version of the law in your jurisdiction. Please verify the status of the code you are researching with the state legislature or via Westlaw before relying on it for your legal needs.