Search



Not a CBA Member? Join Now!
Find A Lawyer Directory
STRATUM
Find A Lawyer Directory
Know Your Judge

SECTION 807. DELEGATION BY TRUSTEE

 

UNIFORM TRUST CODE COMMITTEE

ARTICLE 8

DUTIES AND POWERS OF TRUSTEE

1. UTC SECTION

807

2. SUBJECT

DELEGATION BY TRUSTEE

3. UTC STATUTE

(a) A trustee may delegate duties and powers that a prudent trustee of comparable skills could properly delegate under the circumstances. The trustee shall exercise reasonable care, skill, and caution in:

(1) selecting an agent;

(2) establishing the scope and terms of the delegation, consistent with the purposes and terms of the trust; and

(3) periodically reviewing the agent's actions in order to monitor the agent's performance and compliance with the terms of the delegation.

(b) In performing a delegated function, an agent owes a duty to the trust to exercise reasonable care to comply with the terms of the delegation.

(c) A trustee who complies with subsection (a) is not liable to the beneficiaries or to the trust for an action of the agent to whom the function was delegated.

(d) By accepting a delegation of powers or duties from the trustee of a trust that is subject to the law of this State, an agent submits to the jurisdiction of the courts of this State.

4. NATIONAL CONFERENCE
OF COMMISSIONERS ON
UNIFORM STATE LAWS
COMMENTS

This section permits trustees to delegate various aspects of trust administration to agents, subject to the standards of the section. The language is derived from Section 9 of the Uniform Prudent Investor Act. See also John H. Langbein, Reversing the Nondelegation Rule of Trust-Investment Law, 59 Mo. L. Rev. 105 (1994) (discussing prior law).

This section encourages and protects the trustee in making delegations appropriate to the facts and circumstances of the particular trust. Whether a particular function is delegable is based on whether it is a function that a prudent trustee might delegate under similar circumstances. For example, delegating some administrative and reporting duties might be prudent for a family trustee but unnecessary for a corporate trustee.

This section applies only to delegation to agents, not to delegation to a cotrustee. For the provision regulating delegation to a cotrustee, see Section 703(e).

5.COLORADO COMMITTEE
COMMENTS

Section 807 provides trustees with the ability to delegate certain trust duties and powers to agents. §807 is derived from Section 9 of the RESTATEMENT (THIRD) of TRUSTS: Prudent Investor Rule §171 (1992).

Section 807 is intended to encourage and protect trustees when they reasonably delegate authority. Whether particular functions are delegable is based on whether it is a function that a "prudent" trustee would have delegated under similar circumstances.

This Section only addresses delegation to agents, not delegation to co-trustees.

6. COLORADO LAW

CRS §15-1.1-109 (1997) is almost identical to the language of Section 807. However, §15-1.1-109 is limited to delegation of investment and management functions, while §807 allows delegation of duties and powers. Colorado law, therefore, embraces the more modern approach to delegation spelled out in the Prudent Investor Rule, and rejects the rule found in the RESTATEMENT (SECOND) of TRUSTS §171 (1959) which discouraged delegation to agents.

The official comment that follows CRS §15-1.1-109 suggests that the statute was intended to balance the hazards and advantages of delegation. CRS §15-1.1-109 (cmt.) (1997). It notes that the trustee’s duties of care, skill, and caution in delegation "should protect the beneficiary against overboard delegation". CRS §15-1.1-109 (cmt) (1997). For example, a trustee’s delegation would be deemed unreasonable where he agreed to an exculpation clause in an investment management agreement that left his beneficiaries without recourse. CRS §15-1.1-109 (cmt.) (1997).

The section addresses concerns of trustee immunity, found under subsection (c), as well. Although subsection (c) exonerates the trustee from personal responsibility for the agent’s conduct when the delegation satisfies the standards of subsection (a), subsection (b) makes the agent responsible to the trust. The beneficiaries of the trust can, therefore, rely upon the trustee to enforce the terms of the delegation. CRS §15-1.1-109 (cmt.)(1997).

7. RECOMMENDATIONS

Section 807 has already been adopted (at least as it relates to management and investment functions) in Colorado under CRS 15-1.1-109.

The Subcommittee recommends adoption without modification.