A trustee is a fiduciary of the highest order and is required to exercise a high standard of conduct and loyalty in administration of the trust. Ramsey v. Boatmen’s First Nat’l Bank of K.C., N.A., 914 S.W.2d 384, 387 (Mo. Ct. App. 1996). While a trustee has many duties (e.g., diligence, impartiality, etc.), the most fundamental duty is loyalty. Id. As part of that loyalty, the trustee is to administer the trust solely in the interest of the beneficiary. Id. This duty precludes self-dealing, which under most circumstances is a breach of trust. A trustee is held to something stricter than the morals of the market place. Matter of Cupples, 952 S.W.2d 226 (Mo. 1997). Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior. Id. (quoting Meinhard v. Salmon, 164 N.E. 545, 546 (1928)).
What is the reason for such a high standard of conduct? Among other things, trustees are entrusted with property in which they have no beneficial interest. Klinkerfuss v. Cronin, 199 S.W.3d 831 (Mo. Ct. App. 2006). They hold it for the accommodation and benefit of others — not personal enrichment.
In addition to these traditional duties, Missouri statutes impose specific duties on trustees. One such duty is a duty to inform pursuant to Section 456-008, RSMo. Under this section, a trustee is (1) required to keep beneficiaries of the trusts reasonably informed about the administration of the trust and of material facts necessary for them to protect their interests; (2) must promptly respond to a beneficiary’s reasonable request for information related to the administration of the trust; (3) shall promptly furnish to the beneficiary a copy of the trust instrument; (4) and shall notify the beneficiaries in advance of any change in the method or rate of the trustee’s compensation.
Contact us with questions pertaining to trusts, trustees, beneficiaries, or estates.