The New Jersey Uniform Trust Code – Part Nine: The Office of The Trustee, and The Duties and Powers of the Trustee
Article 6 of the NJ UTC (N.J.S.A. § 3B:31-46 through § 3B:31-53) provides default rules concerning the office of the trustee, many of which were already established in the existing statutes, court rules, and case law.
The process of qualifying as trustee, including procedures to accept or decline the office of trustee, are set forth in N.J.S.A. § 3B:31-46. Testamentary trustees accept the office in accordance with an existing statute, N.J.S.A. § 3B:11-2. Other trustees accept the office either “by substantially complying with a method of acceptance” under the trust or, if the trust terms do not provide a method or the method provided in the terms is not expressly made exclusive, by “accepting delivery of the trust property, exercising powers or performing duties as trustee, or otherwise indicating acceptance of the trusteeship.” N.J.S.A. § 3B:31-46(a)(2)(a)-(b).
Under N.J.S.A. § 3B:31-46(c), a person designated as a trustee, but without accepting the office, may still act to preserve the trust property if, within a reasonable time after acting, that person sends a renunciation of the trusteeship to the settlor, or in cases where the settlor is deceased or incapacitated, to the qualified beneficiaries and to any designated successor trustee. That person may also inspect or investigate trust property.
Bonding of the trustee is addressed in N.J.S.A. § 3B:31-47 and incorporates existing New Jersey statutes.
N.J.S.A. § 3B:31-48 establishes the duties and responsibilities of co-trustees. Co-trustees that are unable to reach a unanimous decision may act by majority decision. N.J.S.A. § 3B:31-48(a). This is consistent with N.J.S.A. § 3B:14-23(k), which applies to all fiduciaries.
Subsection (a) also sets forth how and what happens when a co-trustee dissents from an act of the majority: that dissenting trustee who “joins in carrying out a decision of the majority but expresses his dissent in writing promptly to his co-trustees shall not be liable for the act of the majority.” N.J.S.A. § 3B:31-48(a).
If a vacancy occurs in a co-trusteeship, the remaining co-trustees shall act, unless the trust instrument provides otherwise. N.J.S.A. § 3B:31-48(b). This is consistent with existing law (N.J.S.A. § 3B:14-23(i)).
Subsection (c) requires a co-trustee to participate in the administration of the trust, unless unable to do so because of absence, illness, disqualification under other law, temporary incapacity, or the co-trustee has properly delegated the performance of a function. N.J.S.A. § 3B:31-48(c).
N.J.S.A. § 3B:31-48(d) specifies the extent to which others must act when a co-trustee is unable to perform duties: the remaining co-trustees shall act for the trust when it is “necessary to achieve the purposes of the trust or to avoid injury to trust property.”
Subsection (e) enacts the standards for delegation between co-trustees. N.J.S.A. § 3B:31-48(e).
Subsection (f) states that a co-trustee that does not join in an action because of absence, illness, disqualification, or temporary incapacity, shall not be liable for that action. N.J.S.A. § 3B:31-48(f).
Finally, subsection (g) require every trustee to exercise reasonable care to: (1) prevent a co-trustee from committing a breach of trust; and (2) compel a co-trustee to redress a breach of trust.
N.J.S.A. § 3B:31-49 then lists the ways in which a trusteeship becomes vacant and the procedure for filling a vacancy. For example, if trustees remain in office after a vacancy, the vacancy “need not be filled unless the trust instrument provides otherwise. A vacancy in a trusteeship shall be filled if the trust has no remaining trustee.” N.J.S.A. § 3B:31-49(b). Subsection (c) spells out the procedure to fill a vacancy in a noncharitable trust, and subsection (d) deals with charitable trusts. In any event, the court “may appoint an additional trustee or special fiduciary whenever the court considers the appointment desirable for the administration of the trust.” N.J.S.A. § 3B:31-49(e). Finally, subsection (f) makes clear that the person appointed to fill the vacancy has all the powers and discretions of the original trustee.
N.J.S.A. § 3B:31-50 delineates the procedure for the resignation of a trustee. Subsection (c) makes it clear that resignation is not a release or discharge from liability. N.J.S.A. § 3B:31-50(c).
N.J.S.A. § 3B:31-51 specifies the procedure for the removal of a trustee. The settlor, a co-trustee, or a beneficiary may apply to the court for removal of a trustee. The court may also remove a trustee on its own initiative. N.J.S.A. § 3B:31-51(a).
Under subsection (b), the court may remove a trustee for any of the reasons already stated in N.J.S.A. § 3B:14-21 (such as failing to file an inventory or account within the time fixed by the court, refusal to abide by a court order, embezzlement, waste, neglect, refusal, or incapacity). N.J.S.A. § 3B:31-51(b).
During the process of addressing a request to remove a trustee, or in place of or beyond removing a trustee, “the court may order such appropriate relief as may be necessary to protect the trust property or the interests of the beneficiaries.” N.J.S.A. § 3B:31-51(c).
N.J.S.A. § 3B:31-52 sets forth the continuing authority and duties of a trustee who has resigned or been removed.
N.J.S.A. § 3B:31-53 prescribes standards for reimbursement for expenses.