The Montreal Trust Company Act of 1915, in an early document
of law was passed in the Parliament of Trinidad and Tobago.
This allowed people to establish legal trust instruments in
the interest of estates, companies and creditors.
We have previously examined basic trust arrangements and
the types of trusts. Today, we will focus on the role and
duty of the trustee.
Foremost, is the role of the fiduciary! A fiduciary can
be an individual or an institution charged with the duty to
act exclusively in the supreme interests of the beneficiaries
of the trust, in accordance with the law.
This invokes the concept of total loyalty to the beneficiary
within the relationship. In the case of an institution, there
may be an appointment of named persons who will actually carry
out the functions of the fiduciary.
The trustee is expected to preserve the property of the
trust and defend actions against such property, as well as
ensure that claims and entitlements of the estate are pursued
All facts known to the fiduciary, relevant to any transactions
must be fully disclosed to the beneficiaries. All accounts
must be maintained according to acceptable accounting standards
and must be available to the beneficiaries. In these relationships,
it is not easy to delegate the responsibilities of the fiduciary
The trustee cannot commingle his own property with that
of the estate in the trust and cannot use the trust assets
to make a profit for himself. However, he is charged with
the responsibility to put the property to productive use in
the interest of the beneficiaries. In other words, property
should not be left idle or allowed to waste.
The trustee is expected to exercise the same degree of skill
and prudence, in managing the assets, as though it was his
own. Especially, he is prevented from self-dealing with trust
This means that the fiduciary should not sell trust assets
to himself, even if it is at fair market value. An exception
may be when there is full disclosure and full participation
by all parties, or by a decision of a court of law. If that
is not the case then the beneficiaries can deem the sale transaction
to be void.
If there are other trustees, there is the duty to communicate
with all parties, and decisions on the use and distribution
of assets must get a unanimous vote.
The trustee will distribute income and assets according
to the terms and conditions, of the instrument.
If there are multiple beneficiates, there must be unbiased
treatment and a willingness to hear complaints and to ensure
that appropriate mediation is facilitated if there is a dispute,
especially on the behalf of minors.
Some grantors (creators of the trust) include clauses that
disallow beneficiaries from participating in certain discussions,
in order to prevent conflict.
With respect to institutional instruments, it is possible
for companies to establish common trust funds, into which
assets from single and separate trust agreements can be invested,
collectively. Commonly such arrangements also avoid taxation
of the trust assets.
All actions of the trustee are subject to possible liability
charges. Breach of the fiduciary responsibility is a subject
for the courts. Some breaches of duty are clear, others may
not be so.
For example, would it be a breech in our local market, when
a fiduciary places a sizable sum of money in a savings account
in order to secure the money via the deposit Insurance
laws, when such an account is paying a return of less than
1.5 per cent per annum?