independent trustee

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An independent trustee is an individual or entity who has no interest relating to the trust. So, an independent trustee cannot be a beneficiary of the trust, contributor to the trust, or relatives of the beneficiary or contributor, and so on. Independent trustees should impartially follow the trust instruction and take responsibility for their administration behavior. 

The independent trustee and other types of trustees, all have the duty of care and loyalty to beneficiaries. For instance: 

  • The trustee should administer the trust until it terminates, so they should act according to the trust purpose and terms in good faith, for the best interests of beneficiaries. 
  • The trustee should protect and take control of the trust property as a prudent person with reasonable care.
  • The trustee cannot be involved in self-dealing unless exceptions exist and are authorized by the trust or beneficiaries.
  • The trustee should be impartial to all beneficiaries, which means personal preference and motion cannot influence the administration.
  • If the trustee enters into a transaction with a conflict of interest, the transaction is voidable.
  • If the trustee failed to test the market or invested without considering the risk, they will breach their duty. 

[Last updated in March of 2022 by the Wex Definitions Team]