Contents

Chapter 6
Trustees’ powers

Indicative draft provisions – standard of care

Subpart 2 - Duties of trustee

Default duties

22 Duty to exercise care and skill in management and administration of trust property
(1) A trustee who exercises any power of management or administration of the trust property must do so in accordance with the standard of care set out in section 25.
(2) In subsection (1), a power of management or administration of the trust property—
(a) includes a power, whether created by law or by the terms of the trust, to—
(i) hold trust property; and
(ii) maintain and develop trust property; and
(iii) deal with trust property; and
(iv) insure trust property; and
(v) carry on a business that is trust property; and
(vi) appoint an agent; and
(vii) appoint a delegate; and
(viii) any other power affecting the management or administration of trust property; but
(b) does not include the exercise of a discretion to distribute trust property to beneficiaries.
25 Standard of care for exercise of power of management or administration of trust property
In the exercise of a power set out in section 22(2), a trustee must exercise the care and skill that are reasonable in the circumstances, having regard in particular—
(a) to any special knowledge or experience that the trustee has or holds the trustee out as having; and
(b) if a person acts as a trustee in the course of a business or profession, to any special knowledge or experience that it is reasonable to expect of a person acting in the course of that business or profession.

Commentary

The wording of the standard of care in clause 25 is based upon the Trustee Act 2000 (UK), which appears to be a well-accepted framing of the common law duty of care and has been used in draft trusts legislation in other common law jurisdictions. It can be modified or excluded by the terms of the trust. It emphasises that a higher standard of care is expected of professional trustees, which is described as those acting as a trustee in the course of a business or profession. It is intended that trustees will be held to a standard of care that is commensurate with their special knowledge, experience or professional status, and regardless of whether or not they are paid.