Trustee Duties and Powers
The Arizona Trust Code requires a trustee to have the duty to act in good faith and in accordance with the purpose of the trust. In addition, unless the trust instrument says otherwise, a trustee is also under a duty to prudently manage costs of the trust and to protect against incurring costs that exceed the probable benefit to the trust, and a trustee must also avoid engaging in excessive or unproductive activities.
The Arizona Trust Code allows for the alteration or elimination of all other trustee duties pursuant to the terms of the trust. The Arizona Trust Code lists the default duties of trustees. Those duties are supplemented by Arizona’s Revised Uniform Principal and Income Act. Other state and federal laws may also impose additional duties on the trustee.
Among the many duties are the following: to administer the trust in good faith in accordance with the terms of the trust and the trust’s purpose, and in accordance with the interests of the beneficiaries; duty of loyalty; duty of impartiality; duties of prudent administration, costs of administration, and skill; duties to trust property; duty to inform; duty to notify; duty to report; and the duty to invest prudently.
A trustee’s powers come from the terms of the trust, the default rules of the Arizona Trust Code and Arizona’s Revised Uniform Principal and Income Act, and other federal and state law. The administration of a trust is meant to be free of court supervision unless an interested person seeks to have the court exercise its jurisdictional power over the trust. Some specific powers include: collect trust property; acquire trust property; change trust property; deposit accounts; borrow money; engage in tasks relating to business enterprises; exercise rights with respect to stocks and securities; engage in tasks relating to real property; enter into a lease; grant or acquire an option regarding trust property; insure the property of the trust; abandon property of no value; take any action necessary to comply with environmental laws; deal with claims; pay taxes; make decisions regarding retirement plans, annuities, and life insurance; make loans out of trust property, including to beneficiaries; pledge trust property to guarantee loans; appoint a foreign trustee; make decisions regarding payments to a beneficiary under a legal disability; make decisions regarding distributions; engage in alternative dispute resolution; prosecute or defend an action, claim, or judicial proceeding to protect trust property; sign and deliver contracts and other instruments; and on termination of the trust, exercise the powers necessary to wind up the administration of the trust.