When one agrees to serve as a trustee, one agrees to hold and manage property of behalf of another an heir or a charity, for example. This has always been a serious responsibility to undertake, and those who do so have always been held accountable to high standards of conduct and effectiveness.
This level of accountability has been heightened in Arizona recently, with the adoption of Uniform Declaratory Judgment Act (ARS 12-1834(2)). This law allows any interested party in a trust or an estate to go to court to seek a Declaratory Judgment to direct a trustee to act or not act as the plaintiff wishes. In effect, it removes a layer of insulation from those entrusted with care of others’ property. More than ever, they are subject to others’ looking over shoulder as they conduct their fiduciary duties.More than ever, there is the potential for meddling and discord.
There are many positive aspects to this law, however, and while it requires more care and vigilance on the trustees’ part, the net effect is to add transparency to the business of trusts, in their various forms. Here are some suggestions for Arizona’s trustees (or, as they may be termed, administrators, conservators, devisee, or any others with fiduciary responsibilities.)
1) Make sure that you are thoroughly versed in the laws governing your duties as a trustee. This probably means working closely with an attorney, at least in the initial phases of the enterprise.
2) Recognize that, as you act on the behalf of others, you act in a sort of fishbowl, and each action must be reasonable, prudent, open, and duly recorded. This is no situation for acting on impulse or on one’s own.
3) It is essential to maintain clear and close communication with all interested parties in the fiduciary enterprise. You must act in concert with co-trustees and make every effort to forge and maintain consensus with and among them.
4) Moreover, for those for whom the property is held in trust – heirs or beneficiaries, for example it is doubly important to reassure them that all is well. They are often suspicious about the position of trusteeship, for it may seem to them lofty or privileged, and they may easily imagine secretiveness where there is none.
Here are some suggestions for those interested parties on behalf of whom the trustees serve.
1) You have every right to express interest in the workings of a trust and to receive timely explanations of what the trustees are doing with and about the property held in trust, but recognize that there are common sense limits to your participation.
2) Those who serve as trustees are performing work on your behalf, almost always work that you do not wish to do and work that you could not do well. You may not agree with them on every issue, but that is not a reason to overreact.
3) It is your right to seek, through an attorney, a Declaratory Judgment if trustees are acting in ways you disagree with, but recognize that such actions are costly for everyone, financially and in terms of energy, and that the outcome is always in doubt. Seeking such a ruling should be a last resort if all other methods of communication and negotiation have failed.
4) Trustees are typically chosen for their history of competence, fairness, and dedication to duty. It is of course best to treat them with respect and courtesy and with the recognition that the most desirable trustees will avoid serving in situations that are tense, fractious, or confrontational.