Title 14A, Title 14A: Trusts

§ 704. Vacancy in trusteeship; appointment of successor (a) A vacancy in a trusteeship occurs if: (1) a person designated as trustee rejects the trusteeship; (2) a person designated as trustee cannot be identified or does not exist; (3) a trustee resigns; (4) a trustee is disqual…

§ 705. Resignation of trustee (a) A trustee may resign: (1) upon at least 30 days’ notice in writing to all cotrustees and to the qualified beneficiaries except those qualified beneficiaries under a revocable trust which the settlor has the capacity to revoke; or (2) with the app…

§ 706. Removal and replacement of trustee (a) The settlor, a cotrustee, or a beneficiary may request the probate division of the superior court to remove a trustee under subsection (b) of this section or to replace a trustee under subsection (c) of this section. A trustee may be …

§ 707. Delivery of property by former trustee (a) Unless a cotrustee remains in office or the Probate Division of the Superior Court otherwise orders, and until the trust property is delivered to a successor trustee or other person entitled to it, a trustee who has resigned or be…

§ 708. Compensation of trustee (a) If the terms of a trust do not specify the trustee’s compensation, a trustee is entitled to compensation that is reasonable under the circumstances. (b) If the terms of a trust specify the trustee’s compensation, the trustee is entitled to be co…

§ 709. Reimbursement of expenses (a) A trustee is entitled to be reimbursed out of the trust property, with reasonable interest as appropriate, for: (1) expenses that were properly incurred in the administration of the trust; and (2) to the extent necessary to prevent unjust enri…

§ 801. Duty to administer trust Upon acceptance of a trusteeship, the trustee shall administer the trust in good faith in accordance with its terms and purposes and the interests of the beneficiaries and in accordance with this title. (Added 2009, No. 20, § 1.)

§ 802. Duty of loyalty (a) A trustee shall administer the trust solely in the interests of the beneficiaries. (b) Subject to the rights of persons dealing with or assisting the trustee as provided in section 1012 of this title, a sale, encumbrance, or other transaction involving …

§ 803. Impartiality If a trust has two or more beneficiaries, the trustee shall act impartially in administering the trust, giving due regard to the beneficiaries’ respective interests. (Added 2009, No. 20, § 1.)

§ 804. Prudent administration A trustee shall administer the trust as a prudent person would, by considering the purposes, terms, distributional requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and…

§ 805. Costs of administration In administering a trust, the trustee may incur only costs that are reasonable in relation to the trust property, the purposes of the trust, and the skills of the trustee. (Added 2009, No. 20, § 1.)

§ 806. Trustee’s skills A trustee who has special skills or expertise, or is named trustee in reliance upon the trustee’s representation that the trustee has special skills or expertise, shall use those special skills or expertise. (Added 2009, No. 20, § 1.)

§ 807. Delegation by trustee (a) A trustee may delegate duties and powers that a prudent trustee of comparable skills could properly delegate under the circumstances. The trustee shall exercise reasonable care, skill, and caution in: (1) selecting an agent; (2) establishing the s…

§ 808. Powers to direct (a) While a trust is revocable, the trustee may follow a direction of the settlor that is contrary to the terms of the trust. (b) If the terms of a trust confer upon a person other than the settlor of a revocable trust power to direct certain actions of th…

§ 809. Control and protection of trust property A trustee shall take reasonable steps to take control of and protect the trust property. (Added 2009, No. 20, § 1.)

§ 810. Recordkeeping and identification of trust property (a) A trustee shall keep adequate records of the administration of the trust. (b) A trustee shall keep trust property separate from the trustee’s own property. (c) Except as otherwise provided in subsection (d) of this sec…

§ 811. Enforcement and defense of claims A trustee shall take reasonable steps to enforce claims of the trust and to defend claims against the trust. (Added 2009, No. 20, § 1.)

§ 812. Collecting trust property A trustee shall take reasonable steps to compel a former trustee or other person to deliver trust property to the trustee, and to redress a breach of trust known to the trustee to have been committed by a former trustee. (Added 2009, No. 20, § 1.)…

§ 813. Duty to inform and report (a) A trustee shall keep the qualified beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests. Unless unreasonable under the circumstances, a tru…

§ 814. Discretionary powers; tax savings (a) Notwithstanding the breadth of discretion granted to a trustee in the terms of the trust, including the use of such terms as “absolute,” “sole,” or “uncontrolled,” the trustee shall exercise a discretionary power in good faith and in a…

§ 815. General powers of trustee (a) A trustee, without authorization by the Probate Division of the Superior Court, may exercise: (1) powers conferred by the terms of the trust; and (2) except as limited by the terms of the trust: (A) all powers over the trust property which an …

§ 816. Specific powers of trustee Without limiting the authority conferred by § 815 of this title, a trustee may: (1) collect trust property and accept or reject additions to the trust property from a settlor or any other person; (2) acquire or sell property, for cash or on credi…

§ 817. Distribution upon termination (a) Upon termination or partial termination of a trust, the trustee may send to the beneficiaries a proposal for distribution. The right of any beneficiary to object to the proposed distribution terminates if the beneficiary does not notify th…

§ 901. Prudent investor rule (a) Except as otherwise provided in subsection (b) of this section, a trustee who invests and manages trust assets owes a duty to the beneficiaries of the trust to comply with the prudent investor rule set forth in this chapter. (b) The prudent invest…

§ 902. Standard of care; portfolio strategy; risk and return objectives (a) A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard…

§ 903. Diversification A trustee shall diversify the investments of the trust unless the trustee reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying. (Added 2009, No. 20, § 1.)

§ 904. Duties at inception of trusteeship Within a reasonable time after accepting a trusteeship or receiving trust assets, a trustee shall review the trust assets and make and implement decisions concerning the retention and disposition of assets in order to bring the trust port…

§ 905. Reviewing compliance Compliance with the prudent investor rule is determined in light of the facts and circumstances existing at the time of a trustee’s decision or action and not by hindsight. (Added 2009, No. 20, § 1.)

§ 906. Language invoking standard of this chapter The following terms or comparable language in the provisions of a trust, unless otherwise limited or modified, authorizes any investment or strategy permitted under this chapter: “investments permissible by law for investment of t…

§ 907. Total return unitrusts (a) In this section: (1) “Disinterested person” means a person who is not a “related or subordinate party” (as defined in Section 672(c) of the Internal Revenue Code of 1986, as in effect on the effective date of this title (referred to in this secti…

§ 908. Express total return unitrusts (a) The following provisions shall apply to a trust that, by its governing instrument, requires or permits the distribution, at least annually, of a unitrust amount equal to a fixed percentage of not less than three nor more than five percent…

§ 1001. Remedies for breach of trust (a) A violation by a trustee of a duty the trustee owes to a beneficiary is a breach of trust. (b) To remedy a breach of trust that has occurred or may occur, the Probate Division of the Superior Court may: (1) compel the trustee to perform th…

§ 1002. Damages for breach of trust (a) A trustee who commits a breach of trust is liable to the beneficiaries affected for the greater of: (1) the amount required to restore the value of the trust property and trust distributions to what they would have been had the breach not o…

§ 1003. Damages in absence of breach (a) A trustee is accountable to an affected beneficiary for any profit made by the trustee arising from the administration of the trust, even absent a breach of trust. Nothing in this section limits a trustee’s right to reasonable compensation…

§ 1004. Attorney’s fees and costs In a judicial proceeding involving the administration of a trust, the Probate Division of the Superior Court, as justice and equity may require, may award costs and expenses, including reasonable attorney’s fees, to any party, to be paid by anoth…

§ 1005. Limitation of action against trustee (a) A beneficiary may not commence a proceeding against a trustee for breach of trust more than one year after the date the beneficiary or a representative of the beneficiary was sent a report that adequately disclosed the existence of…

§ 1006. Reliance on trust instrument A trustee who acts in reasonable reliance on the terms of the trust as expressed in the trust instrument is not liable to a beneficiary for a breach of trust to the extent the breach resulted from the reliance. (Added 2009, No. 20, § 1.)

§ 1007. Event affecting administration or distribution If the happening of an event, including marriage, divorce, performance of educational requirements, attainment of a specified age, or death, affects the administration or distribution of a trust, a trustee who has exercised r…

§ 1008. Exculpation of trustee (a) A term of a trust relieving a trustee of liability for breach of trust is unenforceable to the extent that it: (1) relieves the trustee of liability for breach of trust committed in bad faith or with reckless indifference to the purposes of the …

§ 1009. Beneficiary’s consent, release, or ratification A trustee is not liable to a beneficiary for breach of trust if the beneficiary consented to the conduct constituting the breach, released the trustee from liability for the breach, or ratified the transaction constituting t…

§ 1010. Limitation on personal liability of trustee (a) Except as otherwise provided in the contract, a trustee is not personally liable on a contract properly entered into in the trustee’s fiduciary capacity in the course of administering the trust if the trustee in making the c…

§ 1011. Interest as general partner (a) Except as otherwise provided in subsection (c) of this section or unless personal liability is imposed in the contract, a trustee who holds, in a fiduciary capacity, an interest as a general partner in a general or limited partnership is no…

§ 1012. Protection of person dealing with trustee (a) A person other than a beneficiary who in good faith assists a trustee or who in good faith and for value deals with a trustee without knowledge that the trustee is exceeding or improperly exercising the trustee’s powers is pro…

§ 1013. Certification of trust (a) Instead of furnishing a copy of the trust instrument to a person other than a beneficiary, the trustee of a trust at any time after execution or creation of a trust may execute a certificate of trust that sets forth less than all of the provisio…

§ 1101. Trust advisors and trust protectors (a) A trust protector or trust advisor is any person, other than a trustee, who under the terms of the trust, an agreement of the qualified beneficiaries authorized by the terms of the trust, or a court order has a power or duty with re…

§ 1102. Trust advisors and trust protectors as fiduciaries (a) A trust advisor or trust protector is a fiduciary with respect to each power granted to such trust advisor or trust protector. In exercising any power or refraining from exercising any power, a trust advisor or trust …