What are the Different Types of Trustee Rights?

Daphne Mallory

Trustee rights are those created by the trust and established by trust laws and trust case law, in order to provide legal protections for individuals and corporations that are asked to take on the fiduciary duties of a trustee. Specific rights often include the right to settle debtor claims, dispose of real and personal assets as the trustee sees fit, and receive a full account of all assets coming into the trust via probate. The trustee also has the right to reasonable compensation, which is often an annual fee. Beneficiaries of the trust also have rights, and they may sue a trustee for punitive damages if they can show that the actions of the trustee were not made to benefit the trust or its beneficiaries.

Woman with hand on her hip
Woman with hand on her hip

A trust is created by an individual either when they are alive or in accordance with the decedent’s will after death. A trustee is named to manage the affairs of the trust on the beneficiary’s behalf, and successive trustees may be named also. Any individual, company or organization named as a trustee has the right to decline to act as one without any legal obligation. If the trustee chooses to take on the legal duties and responsibilities of managing the trust, then the first source for determining their trustee rights is the trust document. The trust instrument often expands trustee rights beyond those found in the regional trust laws.

The trustee's right to dispose of property, especially real estate, is often the underlying cause of dispute between the trustee and beneficiaries. For example, the trustee may decide to sell a house that is cherished by the beneficiaries and distribute the proceeds according to the percentages outlined in the trust instrument instructions. The trustee may decide that the property market conditions, such as declining home property values, necessitate the need to sell. The same is true for personal property, such as jewelry, clothing or artwork. A trustee often tries to accommodate the wishes of the beneficiaries if the trust does not leave clear instructions for disposing of property, but when many beneficiaries are involved, there are often conflicting interests.

Trustees also are granted trustee rights to receive reasonable pay for their work, and money to hire other professionals from time to time. For example, a trustee may need to hire an attorney to help settle debts with creditors, or to represent the trust at closing on the sale of a home. The amount of pay to the trustee is often represented as a percentage in the trust instrument. Beneficiaries may ask the court to modify the fee if they feel that the amount is unreasonable in comparison to market rates as well as in light of the value of the trust.

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