A trustee — whether appointed privately or by a court — is a fiduciary of the highest order and is required to exercise a high standard of conduct and loyalty in administration of a trust. John r. Boyce Family Trust v. Snyder, 128 S.W.3d 630, 636 (Mo. Ct. App. 2004). Although the trustee has many duties emanating from the fiduciary relationship, Missouri Courts have found that the most fundamental is the duty of loyalty. Id. A trustee’s duty of loyalty requires, among other things, that the trustee administer the trust solely in the interest of the beneficiary/beneficiaries.
Going hand-in-hand with the duty of loyalty is the duty of impartiality. Most trusts have more than one beneficiary. When there is more than one beneficiary, the trustee generally has a duty to act impartially toward the beneficiaries. This does not necessarily mean that the trustee must treat the beneficiaries equally. Instead, the trustee must treat the beneficiaries equitable equally in light of the purposes and terms of the trust.
When administering a trust, the trustee further has a responsibility to use reasonable care, skill, prudence and diligence. To meet this standard, the trustee should consider, among other things, the general economic conditions and the anticipated needs of the trust and its beneficiaries. Courts will specifically look to see if the trustee acted in such a way that a reasonable person in like circumstances would act in light of the terms of the trust instrument. Be aware, however, that a trustee could be held to a higher standard if he/she has special skills or expertise. See Section 456.8-809, RSMo (“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”).
With respect to the duty of prudence and diligence, trust instruments will often grant a fair amount of discretion in managing the trust. Where a settlor/trust-creator vests sole discretion of a matter in a trustee and supplies no objective standard by which to evaluate the reasonableness of its conduct, a court will not interfere in the exercise of that discretion unless the trustee willfully abuses its discretion or acts arbitrarily, fraudulently, dishonestly, or with an improper motive. In re Heisserer, 797 S.W.2d 864, 870 (Mo. Ct. App. 1970). If the trust instrument provides a standard by which the reasonableness of the trustee’s judgment can be tested, a court may control the trustee in the exercise of a power when it is beyond the bounds of reasonable judgment.
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