Trustees have certain powers inherent under applicable laws and also as specified by contract. There are several powers of a trustee inherent under applicable Maine law if a trust document does not provide to the contrary. Being clear on the trustee’s powers in the trust itself is important for several reasons. The client creating the trust (the “Settlor”) should understand what powers are inherent under applicable law, but also should also understand what powers the Settlor desires to give to the trustee and whether to expand or otherwise limit those powers. Setting the powers in the trust itself more clearly expresses the Settlor’s intents and understandings even if some of such powers are inherent under law because it allows for clarity; flexibility for adding additional powers not inherent under law; or for creating restrictions or limitations on certain powers; it removes ambiguity; and helps prevent costs associated with a requirement to seek Probate Court approval of actions to be taken by trustees.
Even though there are several other important trust-related statutes, most Maine laws governing trusts can be found in Title 18-B of the Maine Uniform Trust Code. General powers of trustees are set forth in Chapter 8 (Duties and Powers of Trustee), in Section 815 and specific powers of trustees are set forth in Chapter 8 (Duties and Powers of Trustee) in Section 816.
General Powers of Trustee
Section 815 provides:
1. General powers. A trustee, without authorization by the court, may exercise:
(A) powers conferred by the terms of the trust; and (B) except as limited by the terms of the trust: (1) all powers over the trust property that an unmarried competent owner has over individually owned property; (2) any other powers appropriate to achieve the proper investment, management and distribution of the trust property; and (3) any other powers conferred by this Code.
2. Subject to fiduciary duties. The exercise of power is subject to the fiduciary duties prescribed by this chapter.
Specific Powers of Trustee
- Collect trust property;
- Acquire or sell property;
- Change character of trust property;
- Deposit trust money;
- Borrow money; pledge trust property;
- Continue the business or other enterprise (take any action that may be taken by shareholders, members or property owners, including merging, dissolving or otherwise changing the form of business organization or contributing additional capital);
- Exercise rights of an owner with respect to stocks or other securities;
- Make improvements to real property;
- Enter into a lease as lessor or lessee;
- Grant or acquire option involving a sale, lease or other disposition of trust property or acquire an option for the acquisition of property;
- Insure the property of the trust and insure the trustee, the trustee’s agents and beneficiaries against liability arising from the administration of the trust;
- Abandon or decline to administer property of no value or of insufficient value;
- Handle environmental issues;
- Pay or settle claims against the trust;
- Pay expenses of administration;
- Exercise elections with respect to taxes;
- Handle trustee compensation and benefits;
- Make loans;
- Guarantee loans;
- Appoint trustee in another jurisdiction;
- Pay an amount distributable to a beneficiary who is under a legal disability or incapacitated;
- On distribution of trust property or the division or termination of a trust, make distributions, allocate assets, value the trust property;
- Resolve a dispute concerning the interpretation of the trust or its administration by alternative dispute resolution;
- Prosecute or defend an action, claim or judicial proceeding to protect trust property and the trustee;
- Sign and deliver contracts and other instruments to facilitate the exercise of the trustee’s powers; and
- On termination of the trust, exercise the powers appropriate to wind up the administration of the trust and distribute the trust property.
Duties and Obligations of Trustees
As shown above, the specific powers inherent under Maine law are relatively broad. Along with such powers, however, come responsibilities, including fiduciary obligations and duties of the trustee under law and under the contract, which are outside the scope of this blog but are crucial aspects of protecting the trust and trust property.
For some examples of duties and obligations of trustees inherent under Maine law, see, Duty to administer trust in good faith; the duty of loyalty; the duty of impartiality; the requirement of prudent administration (duty of reasonable care); duty to control and protect trust property; record-keeping requirements; duty to inform and report, among other duties and obligations set forth in Chapter 8).
At Rogoway Law, we can help clients who are looking to set up a trust understand and craft the powers and obligations of the trustee, as well as help clients who are trustees understand their powers, obligations and limitations both under law and contract.