The following is excerpted from Wayne M. Zell’s “Blueprint for Wealth – Successor Trustee Manual”. To purchase a copy of the manual, click here.
A Trustee’s powers are dependent mainly on the terms of the Trust document. (In your Revocable Living Trust, your primary Trustee powers can be found under the section of the Trust entitled, “My Trustee Powers”; other, more specific powers can be found in various other sections throughout the Trust.) Your Trustee powers are also dependent somewhat on state law, which may supplement or even in some cases override certain provisions of the Trust.
Listed below are the Trustee powers that generally apply in most cases. Note that that we have merely named each of these powers, rather than gone into specific detail as to the instructions, guidelines and limitations on the exercise of each of these powers. You need to look at the actual Trust language for any specific instructions, guidelines or limitations, and should also consult the other chapters of this Manual, before exercising the powers below, particularly those noted by an asterisk (*).
Your Trustee powers generally include, but may not be limited to, the powers to:
- Invest.*
- Retain property.
- Abandon property.
- Hold property in the name of the Trustee for the Trust.
- Operate and sell a business.*
- Manage securities.
- Purchase securities and bonds.
- Sell and lease Trust assets.
- Give financial assistance to the estates of the Grantor and the beneficiaries (or to other trusts set up by the Grantor for the beneficiaries).
- Lend money.*
- Purchase and maintain insurance.
- Employ professionals and pay reasonable compensation.
- Pay expenses of the administration.
- Deal with creditors of the Grantor.
- Litigate (including defending against Trust contests or other lawsuits).
- Make tax elections.
- Determine what is principal and income of the Trust.*
- Exercise discretion in payment of income and principal to certain beneficiaries.*
- Accept contributions to the Trust.
- Seek court reformation of the Trust agreement or modify its terms by an agreement between the Trustee and beneficiaries approved by the court.
- Pay income taxes.
- Pay estate, death and generation skipping taxes of the Grantor and beneficiaries.
- Permit beneficiaries to use or reside upon certain Trust assets.*
- Delegate certain powers, such as banking authority.*
- Make non pro rata allocations and distributions between and to beneficiaries or their “sub-trusts”.
- Resign or restrict you own powers.
- Distribute assets in kind or liquidate them and distribute cash.*
- Pay your own Trustee fees.*
- Take actions to permit a beneficiary to obtain government assistance (such as “Medicaid” nursing care benefits).
- Change the legal location or “situs” of the Trust.
- Directly or indirectly call in a “Trust Protector” or third party to assist in taking actions outside your powers.*
Note: There may be a “catchall” provision in the Trust that enables you to have and additional powers necessary to carry out the terms of the Trust and your duties as Trustee. These additional powers cannot be in violation of state law and therefore you should consult with an attorney before exercising any power not listed in the Trust document.
Remember, although you may delegate some of your powers (if permitted under the Trust document), such as signing on a bank account, you cannot delegate your duty to carry out your powers properly. You are responsible for any acts or omissions by someone to whom you may delegate.