Page 43 - Successor Trustee Handbook

Duty to avoid conflicts of interest. You must not engage in transactions,
either directly or through a third party, that will involve, or potentially create, a
conflict of interest between you and the Trust, or between you and the Trust
beneficiaries. For example, if you are a professional or own a business, you
should not engage your own or your businesses’ services. You may not take
actions that benefit you or someone related to you, to the current or potential
detriment of the beneficiaries, and you cannot use Trust property for your own
profit, or for any other non-Trust purpose. For example, unless special Trust
terms permit, you should not invest Trust assets in your own business or use
Trust assets to acquire property from you; you should not purchase property
from or take loans from the Trust; and you should not co-own property with the
Trust. You may, under certain circumstances, take actions that may otherwise
be considered conflicts of interest if you first obtain the informed consent of
the beneficiaries or a court order of approval (see the Chapter, “Your Liability
as Trustee”). Alternatively, you may decide to simply resign as Trustee so that
the conflict will no longer exist.

Duty to enforce claims of the Trust and defend claims against the Trust.
For example, if the Trust is entitled to ownership or control of assets not
properly in the Trust, or to damages (such as a lawsuit relating to the death of
the Trustor), or to reimbursement by others for expenses paid, you have a duty
to enforce these claims. If someone sues the Trust, attempts to obtain
ownership or control of Trust assets, otherwise interferes with the proper
administration of the Trust, or contests the terms of the Trust, you have a duty
to defend The Trust. The expenses involved in enforcing or defending claims,
including attorney and other professional fees, may usually be paid from the
Trust, unless your actions are unlawful or involve gross negligence or willful
misconduct, and so long as the expenses are reasonable.

Duty to act reasonably when exercising any discretion. There are a
number of situations where the Trust document and state law may give you a
varying degree of discretion in your decision making. Probably, the biggest
issues that will involve your discretion will include selling or otherwise disposing
of Trust property, allocating Trust assets to individual beneficiaries’ shares, and
determining whether and in what amounts to distribute to beneficiaries when
the Trust provides for your discretion in doing so. It’s usually a good idea to
maintain, in writing, the reasons why you exercise (or decide not to exercise)
your discretion in a particular way, in case your action (or inaction) is later
called into question.

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