A trustee’s service begins upon acceptance of the trust[1] and continues through resignation or removal.[2] A trustee has legal capacity to acquire, hold and transfer title to property.[3] Individuals, regardless of citizenship, may serve as trustee.[3A] Corporations, partnerships and other entities may serve as trustees if they have power to act as a trustee in Georgia.[4] Where there is no trustee, or where a trustee must be replaced, the trust instrument may designate a successor, a method for naming a successor or a court may fill the vacancy;[5] nonetheless, if there is no method for appointing a successor, then a court with jurisdiction over the trust may appoint one since a trust will not fail for want of a trustee.[6]
Where there are co-trustees, powers may be delegated among them, and surviving co-trustees may act for the trust when there is a vacancy in the office of co-trustee or when a co-trustee is unable to act.[7] Co-trustees hold property as joint tenants with survivorship. When one trustee dies, title to the trust property passes to the surviving trustees.[8]
Trustees have those powers described in the trust as well as statutory powers.[9] Among the inherent powers of a trustee is power to deviate from the trust terms if, owing to circumstances not known to the settlor and not anticipated by him, compliance with a trust term would defeat or substantially impair accomplishment of the trust’s purpose.[10] A trustee may correct a known mistake, so long as it’s action are not in bad faith, are not an abuse of discretion and are not inconsistent with the settlor’s original intent.[11] Successor trustees have the powers of the original trustees unless otherwise provided in the trust.[12]
A trustee shall administer the trust solely in the interests of the beneficiaries.[13] Except where the trust instrument states otherwise, a trustee has a duty of impartiality based on what is fair and reasonable to all beneficiaries, including income and remainder beneficiaries.[14] The trustee is accountable to the beneficiary for the trust property and a violation of any duty owed to the beneficiary is a breach of trust;[15] and each co-trustee has a duty to the beneficiaries in administering the trust and to use reasonable care to prevent a co-Trustee from breaching a trust duty.[16] A beneficiary may bring an action for breach of trust,[17] and may recover damages.[18] Claims against a trustee must be brought within two years if a report was provided to the beneficiary adequately disclosing the claim; if there was no disclosure then any claim against a trustee must be brought within six years.[19]
Notes:
1. O.C.G.A. § 53-12-202; Restatement (Second) of Trusts, § 169. Prior to acceptance, a person nominated as trustee may disclaim the trust. Restatement (Second) of Trusts, § 102.
2. O.C.G.A. § 53-12-220 (resignation); O.C.G.A. § 53-12-221 (removal). A trustee may be involuntarily removed consistent with the terms of the trust instrument. McPherson, at 553. See also Restatement (Second) of Trusts, § 106 (resignation) and § 107 (removal).
3. O.C.G.A. § 53-12-200; Restatement (Second) of Trusts, § 89 (individual as trustee); Id. § 96 (corporation as trustee).
3A. A beneficiary may serve as trustee so long as he or she is not the sole beneficiary. Id. § 99. The settlor may serve as trustee. Id. § 100.
4. A corporation or other entity must have approval from the Georgia Department of Banking and Finance to act as a trust company. Chattawah Open Land Trust, Inc. v. Jones, 281 Ga. 97 (2006). A non-resident may serve as trustee, but by doing so they are deemed to have submitted to jurisdiction here and, if no registered agent is appointed, are deemed to have appointed the Secretary of State. O.C.G.A. § 53-12-320 through 323.
5. O.C.G.A. § 53-12-201. The trust beneficiaries may also appoint a successor trustee by unanimous consent. See Restatement (Second) of Trusts, § 108 (appointment of new trustee).
6. Restatement (Second) of Trusts, § 101.
7. O.C.G.A. § 53-12-204. The Restatement provides that co-trustees must act together unanimously unless the trust states otherwise. Restatement (Second) of Trusts, § 194. If a particular course of action is in the best interests of the trust and one trustee refuses to act, then court approval would be required under the Restatement. The Restatement does, however, provide that the powers of a deceased or departing trustee are conferred on the remaining trustees unless otherwise provided in the trust. Restatement (Second) of Trusts, § 195.
8. Restatement (Second) of Trusts, § 103.
9. The trustee of an express trust has, without court authorization, those statutory powers listed in O.C.G.A. § 53-12-261(b). The powers listed there may be incorporated by reference in a will or trust. O.C.G.A. § 53-12-263(a). Even if the Settlor fails to grant powers listed in O.C.G.A. § 53-12-261, the qualified beneficiaries may grant those powers to the trustee. O.C.G.A. § 53-12-264. See Restatement (Second) of Trusts, § 164 and § 186 (providing that trustee has necessary or appropriate powers to carry out purpose of the trust and which are not forbidden in the trust).
10. Restatement (Second) of Trusts, § 167.
11. Otwell v. First Nat’l Bank, 268 Ga. 547 (1997). In Otwell, the settlor created two trust, each of which benefited his child. One trust was not timely funded and ran a deficit in caring for the needs of the beneficiary. The trustee then transferred funds from the first trust (an intervivos trust) to the second trust (a testamentary trust) to reimburse it for expenditures.
12. Restatement (Second) of Trusts, § 196.
13. O.C.G.A. § 53-12-246(a). A trustee may, however, enter into a compensation agreement.
14. O.C.G.A. § 53-12-247. A self-settled special needs trust or a sole benefit trust would violate the sole benefit rule if remainder beneficiaries were treated equally. Typically a self-settled special needs trust instructs the Trustee to treat the primary beneficiary as the sole beneficiary for life.
15. O.C.G.A. § 53-12-300; Restatement (Second) of Trusts, § 201 (a breach of trust is a violation of any duty owed to the beneficiary). Trustees do not, however, have a duty to do the impossible. Restatement (Second) of Trusts, § 165. Similarly, the trustee has no duty to comply with an illegal term. Restatement (Second) of Trusts, § 166. In fact, the Restatement indicates that if the trustee knows or should know that compliance with a trust term is impossible or illegal, then the trustee has a duty not to attempt to comply with those terms.
16. Restatement (Second) of Trusts, § 184.
17. O.C.G.A. § 53-12-301.
18. O.C.G.A. § 53-12-302.
19. O.C.G.A. § 53-12-307. There is adequate disclosure if the report discloses existence of a claim so that the beneficiary either knows of the claim or reasonably should have inquired into the existence of the claim.
