What Does a Successor Trustee Have to Do in Utah? Notices, Duties, Pay, and Liability
General information, not legal advice. Read the full disclaimer.
Short answer: When a Utah trust becomes irrevocable — usually at the settlor's death — the successor trustee who accepts the job must administer the trust expeditiously and in good faith (Utah Code § 75B-2-801), solely in the beneficiaries' interests (§ 75B-2-802), with the care of a prudent person (§ 75B-2-804), keep records and keep trust property separate from their own (§ 75B-2-808), and, within 60 days after learning the trust became irrevocable, notify the qualified beneficiaries of the trust's existence, the settlor's identity, the right to request a copy and the right to a trustee's report (§ 75B-2-811(2)(c)). On request they must send at least annual reports. A trustee is entitled to reasonable compensation unless the trust sets it (§ 75B-2-708), and can be removed for serious breach, unfitness or other grounds (§ 75B-2-706).
Who this guide is for
Utahns named as successor trustee after a parent's or relative's death, and beneficiaries who want to know what a trustee owes them.
Step 1: Decide whether to accept
You accept by following the method in the trust, or, if none, by accepting delivery of trust property, exercising powers or performing duties as trustee (§ 75B-2-701). You may decline before accepting. Before accepting you may act to preserve the property and inspect it for potential liability (for example, environmental problems), and if you decline, send a rejection within a reasonable time to the settlor or a qualified beneficiary. A trustee can later resign on at least 30 days' notice to qualified beneficiaries, the settlor if living, and any cotrustees, or with court approval (§ 75B-2-705).
Step 2: Give the required notices
Within 60 days (unless the trust provides otherwise), the trustee must:
- notify the qualified beneficiaries of acceptance and give the trustee's name, address and telephone number (§ 75B-2-811(2)(b)); and
- notify them of the trust's existence, the identity of the settlor, their right to request a copy of the trust and their right to a trustee's report (§ 75B-2-811(2)(c)).
On request, the trustee must promptly provide the portions of the trust that describe or affect the beneficiary's interest. Sending the beneficiaries a copy of the trust and a notice can also start a 90-day period for challenging the trust's validity (§ 75B-2-604) — an important reason to do the notices right.
Step 3: Take control and protect the property
- Secure and inventory assets, retitle them in the trust or trustee's name, and keep trust funds separate from your own.
- Get an EIN and open a trust account. See Utah Business EIN for how EINs work generally; trusts have their own IRS rules.
- Pay valid debts, taxes and expenses. Property of a trust that was revocable at death is subject to creditor claims, administration costs, funeral expenses and statutory allowances to the extent the probate estate is inadequate (§ 75B-2-505). See Creditor Claims Against a Utah Estate.
- Insure and maintain real property.
The standards of conduct
- Loyalty (§ 75B-2-802): administer the trust solely in the beneficiaries' interests. A transaction affected by a conflict between your fiduciary and personal interests is voidable by an affected beneficiary unless an exception applies.
- Prudence (§ 75B-2-804): act as a prudent person would, with reasonable care, skill and caution.
- Impartiality (§ 75B-2-803) among beneficiaries, reasonable costs (§ 75B-2-805), recordkeeping (§ 75B-2-808), and a duty to collect trust property and enforce and defend claims.
- Inform and report (§ 75B-2-811): keep qualified beneficiaries reasonably informed, respond promptly to requests, and send at least annually (on request) and at termination a report of trust property, liabilities, receipts and disbursements, the trustee's compensation, and a list of assets and, if feasible, values.
Pay and expenses
If the trust doesn't specify compensation, the trustee is entitled to reasonable compensation under the circumstances (§ 75B-2-708). A trustee is reimbursed from trust property for proper expenses (§ 75B-2-709). Tell beneficiaries in advance of any change in the method or rate of compensation.
When a trustee can be removed
A court may remove a trustee at the request of the settlor, a cotrustee or a qualified beneficiary if the trustee committed a serious breach of trust, cotrustee conflict substantially impairs administration, the trustee is unfit, unwilling or persistently fails to administer effectively, or there's a substantial change of circumstances or all qualified beneficiaries request removal and the court finds it best serves them (§ 75B-2-706). A release from a beneficiary isn't valid to the extent it was induced by the trustee's improper conduct or the beneficiary didn't know the material facts (§ 75B-2-815(3)).
Distributing and closing
On termination the trustee must proceed expeditiously to distribute the trust property to the persons entitled, subject to a reasonable reserve for debts, expenses and taxes, and may send a proposed distribution giving beneficiaries 30 days to object (§ 75B-2-815). Keep records of everything and consider tax filings for the trust and final returns for the decedent.
When to get a lawyer
Large or complicated trusts, disputes among beneficiaries, real property in several states, a business, or a trust with ongoing sub-trusts (for a child or a beneficiary with special needs). See also Utah Personal Representative Duties if there is also a probate case, and Contested Probate in Utah.
Frequently asked questions
When must a successor trustee notify beneficiaries?
Within 60 days after accepting the trusteeship and within 60 days after learning the trust became irrevocable, unless the trust provides otherwise.
Can a trustee be paid?
Yes, reasonable compensation unless the trust specifies it.
Can a beneficiary see the trust?
A qualified beneficiary may request the portions of the trust that describe or affect their interest.
What if I made a mistake?
Talk to an attorney promptly; trustees can be liable for breach of trust, and a release by a beneficiary may be invalid if the beneficiary didn't know the facts.