Duties of Trustees

• Author: EILEEN E. GILLESE
• Pages: 154-167

154

CHA PTER 9

DUTIES OF TRUSTEES

A. INTRODUC TION

Trusteeship is an extremely onerous position. Trustees are subject to

the specif‌ic duties created by t he trust instr ument and by legislation.

In addition, they have a great many duties placed upon them by equity.

These duties have been car ved out through a long series of cases decided

by the courts of equity and according to equitable principles; although

it seems like a contradiction in ter ms, when we describe such duties, we

will refer to them as common law duties. The words “common law” are

used not as a reference to the King’s common law courts but in contra-

distinction to duties imposed by legislation or by instrument.

An understanding of the common law duties imposed upon trust-

ees has as its starting point the fact that a trustee is a f‌iduciary.1 The

trustee exists to administer the property on behalf of the benef‌iciary.

The trustee is to put the benef‌iciary’s interests f‌irst in t he performance

of any act and the exercise of any powers or duties. This obligation to

act solely for the benef‌it of the benef‌iciary is ter med the “duty of loyalty.”

It is the duty of loyalty that underlies all the duties discussed in this

chapter: t he obligation to perform personal ly, the duty to invest the trust

assets, the obligation to act impar tially, the duty to account, and the duty

to provide information. The duty of loyalty also requires trustees to act

honestly, with candour and diligence; avoid placing themselves in situa-

tions of conf‌lict of interest; and derive no prof‌it from their position.

1 See Chapter 1 for a more deta iled discussion of the f‌iduci ary concept.