How family relationships affect fiduciary roles

Estate representatives generally need agreement

In Minnesota, for example, when two or more people are appointed estate corepresentatives, all generally must concur in administration and distribution acts unless the will or court provides otherwise. Other states differ.

Exceptions permit receiving and receipting for estate property, delegated action, and emergency action necessary to preserve the estate when concurrence cannot readily be obtained within the reasonably available time.

People dealing with a corepresentative receive statutory protection if actually unaware of another appointment or advised that the representative has authority to act alone for one of those reasons.

Cotrustees have different decision and oversight rules

In Minnesota, for example, an accepting trustee must administer in good faith under the trust's terms and purposes, beneficiaries' interests and applicable law. Other states differ.

Trust terms generally override statutory defaults, subject to mandatory limits, including good faith, lawful purposes and specified court powers.

Subject to those terms and limits, cotrustees unable to reach unanimity may act by majority decision. Remaining cotrustees may act after a vacancy.

Temporary unavailability permits remaining action only when absence, illness, legal disqualification or other temporary incapacity prevents service and prompt action is necessary to achieve trust purposes or avoid injury to trust property.

In that situation, the remaining cotrustee or a majority of the remaining cotrustees may act.

Cotrustees must participate unless unavailable for one of those reasons or properly delegating a function to another trustee. Delegation must be prudent under the circumstances and may be revoked unless irrevocable.

Each trustee must exercise reasonable care to prevent a cotrustee's serious breach and compel redress for one. Subject to those duties, a trustee who does not join another trustee's action is not liable for it.

A dissenter joining an action at the majority's direction is protected only after notifying a cotrustee of dissent at or before the action, and only if the action is not a serious breach.

Financial agents may have individual authority

In Minnesota, for example, when a financial power of attorney authorizes multiple agents, one agent's action pursuant to that power binds the principal unless the instrument provides otherwise, even if another agent objects. Other states differ.

The action also binds the principal's heirs, assigns and estate representative as though the principal acted.

If an appointed guardian or conservator alone has power to take the relevant action, the statute treats the agent's action as though that guardian or conservator acted.

Records and access depend on the role

In Minnesota, for example, a financial agent must keep complete records of transactions undertaken for the principal. Other states differ.

An accounting is required when the principal requests one, when the instrument requires accountings and specifies recipients, or after the agent reimburses personal expenditures made on the principal's behalf.

A written statement giving reasonable notice of all transactions is adequate.

Record examination and copying rights belong to the principal and any accounting recipient designated in the power. While the principal lives, the guardian or conservator of the principal's estate also has those rights.

After death, the principal's estate representative has those rights. Being a sibling alone does not establish a right to examine the agent's records.

Trustees, subject to trust terms and mandatory limits, must keep adequate administration records and separate trust property from their own. Separate trusts may be invested together if records clearly identify each trust's interests.

Meeting agendas and trust disclosure are separate

In Minnesota, for example, trustees of irrevocable trusts must reasonably inform qualified beneficiaries about administration and material facts needed to protect their interests. Other states differ.

Trustees must promptly answer beneficiary requests about administration unless unreasonable under the circumstances.

An express trust provision may substitute the settlor or another information recipient during a period when the terms require that recipient to be informed. The trustee must promptly answer that recipient's administration questions.

Unless trust terms provide otherwise, the recipient has standing to enforce the trust but acts in a nonfiduciary capacity, without a duty to enforce or act on the information.

A trustee prohibited by express trust terms from sharing information with beneficiaries may petition for judicial approval, following statutory notice requirements.

A beneficiary may waive information rights or withdraw a waiver by notice delivered to the trustee. Choosing a meeting agenda without dollar amounts does not establish a right to withhold all information indefinitely.

Two related terms

Duty of loyalty: In Minnesota, for example, a trustee owes loyalty to beneficiaries and must not put personal interests above theirs. Other states differ.

Duty of impartiality: In Minnesota, for example, a trustee administering for two or more beneficiaries must act impartially with due regard to their respective interests. Other states differ.

Common questions