Introduction to powerful State Trust Laws and Fiduciary Principles
Trust law is a fundamental component of estate planning and fiduciary duty, providing the legal framework for the management and administration of trusts by trustees. While the core principles of loyalty, prudence, and transparency are universally recognized, each state has developed its own statutes and regulations that govern trust creation, trustee powers, and fiduciary responsibilities.
This page offers an overview of trust laws across several key states—Nebraska, South Dakota, New Mexico, Texas, Florida, California, New York, Nevada, and others—highlighting their adoption of the Uniform Trust Code (UTC) principles or the development of independent statutes. By examining these state-specific provisions, we can better understand the diversity in legal standards and the evolving landscape of trust law in the United States. Whether focusing on trustee duties, powers, or beneficiary protections, these statutes form the backbone of trust administration and serve as crucial guides for legal practitioners, trustees, and beneficiaries alike.
Basic principle in trust law, Under standard trust law, The trustee is the one who holds legal title and has fiduciary control over the trust property, not the beneficiary.
Restatement 3rd over trust under section 70 The trustee has a duty and the power to manage the trust and the trust property and administer the trust.
Bogarts’ trusts and trustees section 42, the beneficiary is not the manager or controller over the trust estate that is reserved to the trustee.
Federal tax Law IRC section 671 and section 679 The trustee is treated as the responsible party responsible for the administration and taxation of the trust.
Uniform Trust Code (UTC):
Many states have adopted the UTC, which explicitly defines the duties and responsibilities of trustees, including loyalty, prudence, and impartiality.
Citation: Uniform Trust Code § 808 (Trustee’s duties).
Note: As a model law, it has been adopted in various states; check your state's version.Restatement (Third) of Trusts, §§ 87-92:
These sections outline fiduciary duties, including duty of loyalty, prudence, and impartiality.
Citation: Restatement (Third) of Trusts §§ 87-92 (Am. Law Inst. 2003).
The Uniform Trust Code (UTC) is a comprehensive model law designed to standardize trust law across states that adopt it. It provides detailed provisions on trustee authority, fiduciary duties, and the administration of trusts.
Key Sections of the Uniform Trust Code (UTC) Related to Trustee Authority and Fiduciary Duties
Trustee Powers and Responsibilities
UTC § 804. General Fiduciary Duties of Trustee
This section emphasizes that trustees must administer the trust solely in the interests of the beneficiaries, with duties of loyalty and prudence.
Citation: Uniform Trust Code § 804 (2010).
Text excerpt:"A trustee shall administer the trust solely in the interests of the beneficiaries."
UTC § 805. Duty to administer Trust According to Terms and Law
Trustees must follow the terms of the trust and applicable law.
Citation: UTC § 805.UTC § 813. Power of Trustee to Control and Manage Trust Property
This section grants trustees broad authority to manage trust assets, including investment and distribution powers.
Citation: UTC § 813.UTC § 814. Power of Trustee to Invest and Reinvest
Details trustees' authority regarding investment decisions, emphasizing prudence.
Citation: UTC § 814.
Fiduciary Duties
UTC § 803. Duty of Loyalty
Trustees must act solely in the beneficiaries' interests and avoid conflicts of interest.
Citation: UTC § 803.UTC § 806. Impartiality
Trustees must act impartially when managing assets for multiple beneficiaries.
Citation: UTC § 806.UTC § 807. Duty to Inform and Account
Trustees are required to keep beneficiaries informed and provide accountings.
Citation: UTC § 807.
Legal References and Adoption
Many states have enacted the UTC either wholly or in part. For example:
California: California Probate Code §§ 15900-15960 (adopted UTC provisions).
New York: New York Estates, Powers and Trusts Law (EPTL) incorporates many UTC principles.
New York
Status: Does not explicitly adopt the UTC but incorporates many principles similar to UTC in its Estates, Powers and Trusts Law (EPTL).
Citation: N.Y. EPTL §§ 7-1.1 to 11-2.4 (Trust provisions).
Details: The EPTL governs trust creation, trustee duties, powers, and administration. It emphasizes fiduciary duties such as loyalty, prudence, and impartiality, akin to UTC standards.
Additional Reference: The New York Surrogate’s Court Procedure Act (SCPA) also contains provisions relevant to trust administration.
Link: New York EPTL
New York EPTL (Estates, Powers and Trusts Law) – Key Sections
1. Section 7-1.1 – Fiduciary Duties of Trustee
Emphasizes that trustees must act with loyalty, prudence, and in the best interests of the beneficiaries.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries."
Citation: EPTL § 7-1.1.
2. Section 7-1.3 – Duty of Loyalty
Trustees must avoid conflicts of interest and self-dealing.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries."
Citation: EPTL § 7-1.3.
3. Section 7-1.4 – Duty of Prudence
Trustees are required to exercise care, skill, and caution, acting as a prudent person would manage their own affairs.
Key point:
"A trustee shall invest and manage trust assets as a prudent investor would, considering the purposes, terms, and circumstances of the trust."
Citation: EPTL § 7-1.4.
4. Section 7-1.6 – Powers of Trustees
Grants broad powers for trustees to manage and control trust property, including investing, selling, leasing, and distributing assets.
Key point:
"A trustee has all powers over trust property that an individual may exercise, including the power to invest, sell, lease, and manage trust assets."
Citation: EPTL § 7-1.6.
5. Section 7-1.8 – Duty to Keep Beneficiaries Informed and Account
Trustees are required to keep beneficiaries reasonably informed about trust administration and provide annual accountings.
Citation: EPTL § 7-1.8.
California
Status: California has not adopted the UTC but has its own comprehensive trust law in the California Probate Code, particularly Sections 15000-15980.
Citation: California Probate Code §§ 15900-15960 (Trust law provisions).
Details: California law emphasizes fiduciary duties, trustee powers, and trust administration, aligning closely with UTC principles but enacted independently.
Additional Reference: The California Civil Code also contains relevant provisions on fiduciary duties.
Link: California Probate Code
California Probate Code (Cal. Prob. Code §§ 15900-15960) – Key Sections
1. Section 15900 – Fiduciary Duties of Trustee
Emphasizes that trustees must act in good faith and in the best interests of the beneficiaries, exercising prudence and loyalty.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries."
Citation: Cal. Prob. Code § 15900.
2. Section 15901 – Duty of Loyalty
Trustees must avoid conflicts of interest and self-dealing.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries."
Citation: Cal. Prob. Code § 15901.
3. Section 15902 – Duty of Prudence
Trustees are required to exercise care, skill, and caution, managing trust assets prudently.
Key point:
"A trustee shall invest and manage trust property as a prudent investor would, considering the purposes, terms, and circumstances of the trust."
Citation: Cal. Prob. Code § 15902.
4. Section 15904 – Powers of Trustees
Grants broad powers, including investing, selling, leasing, and managing trust assets.
Key point:
"A trustee has all powers over trust property that an individual may exercise, including the power to invest, sell, lease, and manage trust assets."
Citation: Cal. Prob. Code § 15904.
5. Section 15906 – Duty to Keep Beneficiaries Informed and Account
Trustees must keep beneficiaries reasonably informed and provide annual accountings.
Citation: Cal. Prob. Code § 15906.
Nebraska
Status: Nebraska has enacted substantial parts of the UTC through the Nebraska Uniform Trust Code.
Citation: Nebraska Revised Statutes §§ 30-3801 to 30-3852 (adopted parts of UTC 2010).
Details: The Nebraska Trust Code, enacted in 2014, closely aligns with the UTC, governing trustee powers, fiduciary duties, and trust administration.
Link: Nebraska Trust Code
Nebraska Trust Code (Neb. Rev. Stat. §§ 30-3801 to 30-3852) – Key Sections
1. Section 30-3804 – Fiduciary Duties of Trustees
Emphasizes that trustees must administer the trust solely in the best interests of the beneficiaries, with duties of loyalty, prudence, and impartiality.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries."
Citation: Neb. Rev. Stat. § 30-3804.
2. Section 30-3805 – Duty of Loyalty
Trustees must avoid conflicts of interest and self-dealing.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries and shall not profit from their position."
Citation: Neb. Rev. Stat. § 30-3805.
3. Section 30-3806 – Duty of Prudence
Trustees are required to act with care, skill, and caution, similar to a prudent person managing their own assets.
Key point:
"A trustee shall invest and manage trust property as a prudent investor would, considering the purposes, terms, and other circumstances of the trust."
Citation: Neb. Rev. Stat. § 30-3806.
4. Section 30-3810 – Powers of Trustees
Grants trustees broad powers to manage trust property, including investing, selling, leasing, and distributing trust assets.
Key point:
"A trustee has all powers over trust property that an individual may exercise, including the power to invest, sell, lease, and manage trust assets."
Citation: Neb. Rev. Stat. § 30-3810.
5. Section 30-3813 – Duty to Keep Beneficiaries Informed and Account
Trustees are required to keep beneficiaries reasonably informed and to account for their administration.
Citation: Neb. Rev. Stat. § 30-3813.
South Dakota
Status: South Dakota has enacted the South Dakota Trust Code, which incorporates many UTC principles.
Citation: South Dakota Codified Laws §§ 55-1-1 to 55-1-157 (adopted in 2018).
Details: The South Dakota Trust Code is modern and flexible, with provisions mirroring the UTC on trustee authority and fiduciary duties.
Link: South Dakota Trust Code
South Dakota Trust Code (SDCL §§ 55-1-1 to 55-1-157) – Key Sections
1. Section 55-1-4 – Fiduciary Duties of Trustee
This section emphasizes that trustees must administer the trust solely in the best interests of the beneficiaries, acting with loyalty and prudence.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries."
Citation: SDCL § 55-1-4.
2. Section 55-1-6 – Duty of Loyalty
Trustees must avoid conflicts of interest and self-dealing.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries and shall not profit from their position."
Citation: SDCL § 55-1-6.
3. Section 55-1-7 – Duty of Prudence
Trustees are required to act with care, skill, and caution, similar to a prudent person managing their own assets.
Key point:
"A trustee shall invest and manage trust assets as a prudent investor would, considering the purposes, terms, and other circumstances of the trust."
Citation: SDCL § 55-1-7.
4. Section 55-1-13 – Powers of Trustees
Grants trustees broad powers to manage trust property, including investing, selling, leasing, and distributing assets.
Key point:
"A trustee has all powers over trust property that an individual may exercise, including the power to invest, sell, lease, and otherwise manage trust assets."
Citation: SDCL § 55-1-13.
5. Section 55-1-15 – Duty to Keep Beneficiaries Informed and Account
Trustees must keep beneficiaries reasonably informed and provide annual accountings.
Citation: SDCL § 55-1-15.
New Mexico
Status: New Mexico has not explicitly adopted the UTC, but its trust laws are influenced by the UTC and other model statutes.
Citation: New Mexico Statutes §§ 45-7-101 to 45-7-802 (New Mexico's Uniform Trust Act, enacted in 2009).
Details: The New Mexico Trust Act aligns with many UTC principles, particularly regarding trustee duties and powers.
Link: New Mexico Trust Laws
New Mexico Uniform Trust Act (N.M. Stat. §§ 45-7-101 to 45-7-802) – Key Sections
1. Section 45-7-105 – Fiduciary Duties of Trustee
Emphasizes that trustees must act with loyalty, prudence, and in accordance with the terms of the trust, always prioritizing the interests of beneficiaries.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries."
Citation: N.M. Stat. § 45-7-105.
2. Section 45-7-107 – Duty of Loyalty
Trustees must avoid conflicts of interest and self-dealing.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries and shall not profit from their position."
Citation: N.M. Stat. § 45-7-107.
3. Section 45-7-108 – Duty of Prudence
Trustees are required to act with care, skill, and caution, similar to a prudent person managing their own assets.
Key point:
"A trustee shall invest and manage trust property as a prudent investor would, considering the purposes, terms, and other circumstances of the trust."
Citation: N.M. Stat. § 45-7-108.
4. Section 45-7-110 – Powers of Trustees
Grants broad powers to trustees to manage trust property, including investing, selling, leasing, and distributing assets.
Key point:
"A trustee has all powers over trust property that an individual may exercise, including the power to invest, sell, lease, and manage trust assets."
Citation: N.M. Stat. § 45-7-110.
5. Section 45-7-115 – Duty to Keep Beneficiaries Informed and Account
Trustees must keep beneficiaries reasonably informed and provide annual accountings.
Citation: N.M. Stat. § 45-7-115.
Texas
Status: Texas adopted the Texas Trust Code in 2005, which is based in large part on the UTC.
Citation: Texas Estates Code §§ 113.001 to 113.262.
Details: The Texas Trust Code incorporates trustee authority, fiduciary duties, and trust administration standards similar to the UTC.
Link: Texas Estates Code
Texas Trust Code (Texas Estates Code §§ 113.001 – 113.262) – Key Sections
1. Section 113.002 – Fiduciary Duties of Trustee
Emphasizes that trustees must act with loyalty, prudence, and in the best interests of the beneficiaries.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries."
Citation: Texas Estates Code § 113.002.
2. Section 113.021 – Duty of Loyalty
Trustees must avoid conflicts of interest and self-dealing.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries and shall not profit from their position."
Citation: Texas Estates Code § 113.021.
3. Section 113.022 – Duty to Invest Prudently
Trustees are required to invest and manage trust assets prudently, considering the purposes of the trust.
Key point:
"A trustee shall invest and manage trust property as a prudent investor would, considering the purposes, terms, and circumstances of the trust."
Citation: Texas Estates Code § 113.022.
4. Section 113.023 – Powers of Trustees
Grants trustees broad powers to manage trust assets, including investing, selling, leasing, and distributing property.
Key point:
"A trustee has all powers over trust property that an individual may exercise, including the power to invest, sell, lease, and manage trust assets."
Citation: Texas Estates Code § 113.023.
5. Section 113.051 – Duty to Keep Beneficiaries Informed and Account
Trustees must keep beneficiaries reasonably informed and provide annual accountings.
Citation: Texas Estates Code § 113.051.
Florida
Status: Florida has not explicitly adopted the UTC but has a comprehensive trust law codified in the Florida Trust Code.
Citation: Florida Statutes §§ 736.0101 to 736.1004 (enacted in 2007).
Details: Florida's Trust Code is modern and incorporates many principles similar to the UTC regarding trustee duties and powers.
Florida Trust Code (Chapter 736) – Key Sections
1. Section 736.0801 – General Fiduciary Duties
This section codifies the fundamental fiduciary duties of trustees, including the duties of loyalty, prudence, and acting in the best interest of beneficiaries.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries."
Citation: Fla. Stat. § 736.0801.
2. Section 736.0802 – Duty of Loyalty
Trustees must act with loyalty, avoiding conflicts of interest and self-dealing.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries."
Citation: Fla. Stat. § 736.0802.
3. Section 736.0803 – Duty of Prudence
Trustees are required to act with care, skill, prudence, and caution under the circumstances.
Key point:
"A trustee shall invest and manage trust property as a prudent investor would, by considering the purposes, terms, and other circumstances of the trust."
Citation: Fla. Stat. § 736.0803.
4. Section 736.0804 – Duty to Follow Trust Terms
Trustees must administer the trust according to its terms and applicable law.
Citation: Fla. Stat. § 736.0804.
5. Section 736.0812 – Powers of Trustees
Outlines the powers trustees have to manage and control trust property, including investing, selling, and distributing assets.
Key point:
"A trustee has all powers over trust property that an individual may exercise, including the power to invest, sell, lease, and manage trust assets."
Citation: Fla. Stat. § 736.0812.
6. Section 736.0813 – Duty to Inform and Account
Trustees are required to keep beneficiaries reasonably informed and to account for their administration.
Citation: Fla. Stat. § 736.0813.
Nevada Trust Law (NRS Chapter 163) – Key Sections
1. Section 163.005 – Fiduciary Duties of Trustee
Emphasizes that trustees must act with loyalty, prudence, and in the best interests of the beneficiaries.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries."
Citation: NRS 163.005.
2. Section 163.015 – Duty of Loyalty
Trustees have a duty to avoid conflicts of interest and self-dealing.
Key point:
"A trustee shall administer the trust solely in the interests of the beneficiaries."
Citation: NRS 163.015.
3. Section 163.025 – Duty of Prudence
Trustees are required to invest and manage trust property prudently, with care and skill.
Key point:
"A trustee shall invest and manage trust property as a prudent investor would, considering the purposes, terms, and circumstances of the trust."
Citation: NRS 163.025.
4. Section 163.045 – Powers of Trustee
Grants broad powers to trustees to manage and control trust assets, including investing, selling, leasing, and distributing.
Key point:
"A trustee has all powers over trust property that an individual may exercise, including the power to invest, sell, lease, and manage trust assets."
Citation: NRS 163.045.
5. Section 163.055 – Duty to Keep Beneficiaries Informed and Account
Trustees are required to keep beneficiaries reasonably informed and to provide annual accountings.
Citation: NRS 163.055.
Additional Resources and Commentaries
Official Commentaries to the UTC provide detailed explanations of each section, clarifying trustee duties and authority.
Citation: Uniform Trust Code, Official Comments (2010).
How to Access the UTC and Commentaries
The full text of the UTC and official comments are available through the Uniform Law Commission website:
https://www.uniformlaws.org/committees/community-home?CommunityKey=4a8d0a2f-6dff-4347-87a8-4f779b8a6a8d
Fiduciaries and trustees are generally held to high standards of care and loyalty, including:
Duty of loyalty: Avoid conflicts of interest.
Duty of prudence: Manage trust assets responsibly.
Duty to act in the best interests of beneficiaries.
Obligation to administer the trust according to its terms and applicable laws.
https://www.uniformlaws.org/committees/community-home?CommunityKey=4a8d0a2f-6dff-4347-87a8-4f779b8a6a8d