Duties of Trustees : A Refresher
Fiduciary Focus : Reclaiming the Mission of Trust Administration Amid Oversight
Trustees are fiduciaries tasked with managing assets in beneficiaries ’ best interests , guided by state and federal laws like the Uniform Trust Code ( UTC ) and the Restatement ( Third ) of Trusts . Their core duties include :
1 . Loyalty : Acting in the best interests of beneficiaries , avoiding conflicts of interest and self-dealing , and administering the trust in good faith ( UTC § 802 ).
2 . Care and Prudence : Managing assets responsibly under the Prudent Investor Rule , balancing risk and return .
3 . Impartiality : Treating all beneficiaries fairly and equitably ( UTC § 803 ).
4 . Accountability : Maintaining accurate records , providing regular accountings , and upholding transparency in trust administration ( UTC § 813 ).
5 . Administration : Acting in good faith , in accordance with the trust ’ s terms and purposes , and in a manner consistent with the settlor ’ s intent ( UTC § 801 ).
6 . Confidentiality : Protecting sensitive trust related information and avoiding unauthorized and improper disclosure .
While these duties form the foundation of trust administration , the ever changing regulatory environment introduces complexities that make balancing these obligations challenging .
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The Evolution of Banking Regulations
The regulatory environment for corporate trustees has evolved significantly , shaped by historical events and financial reforms . Understanding this progression is essential to contextualize the challenges trustees face today . by Tammie M . Sandoval , J . D ., CTFA Northern Trust
Corporate trustees stand at a confluence of fiduciary obligations and an increasingly complex regulatory environment . As trustees grapple with overlapping frameworks like the Foreign Account Tax Compliance Act ( FATCA ), the Bank Secrecy Act ( BSA ), and the Dodd-Frank Act , they face the challenge of prioritizing complex reporting requirements and timeconsuming day-to-day trust administration . This web of regulation can be overwhelming , creating situations where compliance takes up so much time and resources that the trustee ’ s focus on administration is diluted . This dilution raises questions about whether the trustee is fulfilling their fiduciary duty or if regulatory compliance compromises the overall trust administration process .
This article explores the balance between fiduciary duties and federal regulations , identifies the challenges corporate trustees face , and offers practical strategies for balancing regulatory compliance with the fundamental purposes of trust administration .
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The Early Era : Safeguarding Stability ( 1930s – 1970s )
Regulations like the Glass-Steagall Act of 1933 primarily focused on reducing systemic financial risk . During this time , trust administration was relatively simple , governed mainly by state laws and fiduciary principles .
The Deregulation Wave : Expanding Corporate Roles ( 1980s – 1990s )
The Gramm-Leach-Bliley Act of 1999 repealed portions of Glass- Steagall , allowing financial institutions to consolidate services , including trust administration , which in turn required greater vigilance from trustees .
Post-Crisis Reforms : Rising Regulatory Complexity ( 2008-2010s )
The 2008 financial crisis triggered sweeping reforms , and implementation of various legislation such as the Dodd-Frank Wall Street Reform and Consumer Protection Act , FATCA , enhanced anti-money laundering provisions of the BSA , and significant reporting and due diligence obligations .
Today ’ s Landscape : The Balancing Act Corporate trustees must now navigate overlapping frameworks , which ensure financial integrity but may divert focus from core fiduciary duties . _______________________________________________________
26 | THE DOCKET - MARCH 2025