Duties and Liabilities of Trustees

Role of a Trustee is pivotal in the administration of a trust, carrying both duties and liabilities to ensure the trust operates as intended for the benefit of its beneficiaries. These responsibilities are outlined in the Indian Trusts Act, 1882, for private trusts, and there are analogous duties for trustees of public or charitable trusts under various laws.

Duties of Trustees:

• Duty to Execute the Trust:

Trustees must carry out the specific directions of the trust deed unless those directions are modified by the consent of all beneficiaries or authorized by the court.

• Duty of Loyalty:

Trustees must act in the best interests of the beneficiaries, avoiding conflicts of interest and not using their position for personal gain.

• Duty of Care:

Trustees are required to manage and invest trust property with the same care as a reasonably prudent person would with their own assets. This includes the duty to preserve trust property and to make it productive.

• Duty to Keep Accounts:

Trustees must keep clear, accurate, and up-to-date accounts of the trust property, allowing for an audit or review as necessary.

• Duty to Provide Information:

Upon request, trustees must furnish beneficiaries with adequate information about the assets, liabilities, and administration of the trust.

• Duty to Act Impartially:

Trustees must act fairly and impartially among beneficiaries, especially when the trust involves multiple beneficiaries with varying interests.

• Duty to Not Delegate:

Trustees cannot delegate their duties or powers unless expressly authorized by the trust deed, by law, or by consent of the beneficiaries. However, they can employ agents for tasks that require special skills or are purely administrative.

• Duty to Not Profit from Trusteeship:

Trustees must not use their position or trust property for personal gain. Any profit made from breach of this duty belongs to the trust.

• Duty to Keep Trust Property Separate:

Trust property must be clearly identified and kept separate from the trustee’s personal property.

Liabilities of Trustees:

• Liability for Breach of Trust:

Trustees are personally liable to the beneficiaries for any loss to the trust estate resulting from a breach of trust, whether the breach arises from negligence or fraud.

• Liability for Co-trustees’ Acts:

A trustee may be liable for the acts or omissions of their co-trustees if they have authorized or concurred in those acts.

• Liability for Unauthorized Profits:

Trustees must account for and may be required to repay any profits made from the trust property that were not authorized by the trust deed or by the beneficiaries.

• Liability for Loss through Delegation:

If trustees improperly delegate their duties and loss results, they may be liable to the beneficiaries for that loss.