Your trustee has two duties. She must manage the trust property and distribute the trust property to the beneficiaries. When you create your trust you put two sets of instructions in your trust document. The first set of instructions deals with how to manage the trust property, and the second set deals with what the trustee is supposed to do with the trust property for the benefit of the beneficiaries.

Management of the Trust Property

There are two duties your trustee has regarding the management of your trust property. The first duty of the trustee is to follow the instructions you have provided in the trust document. Typically, those instructions regarding the management of the trust property are standard directions.

Most trust documents give the trustee very broad management powers. If you don't want your trustee to be able to exercise a particular management power over the trust property, you need to restrict the trustee's power. For instance, some creators of trusts do not want to give the trustee the power to borrow against the property. Be aware, however, that if your trust is going to stay in place for a long time after you are gone, it is very difficult for your trustee to manage the trust property if you place too many restrictions on what she can do with it.

If your trust is not going to last very long, it may be important to you that the trust property not be sold. Your goal may be to delay the distribution of the trust property until the beneficiaries are older. In that case, prohibiting the trustee from selling trust property may meet your goals. You need first to consider the purpose of your trust, and then decide how or if you want to restrict the management powers of the trustee.

Duty Established by Law

Regardless of the specific instructions you place in your trust document, your trustee has a duty that is established by law. Your trustee must manage the trust property as a reasonably prudent person would do. There are two different standards for this. Some state laws say that the trustee must manage the trust property as a reasonably prudent person would do if he were managing his own property. Other states say that the trustee must manage the trust property as a reasonably prudent person would do if she were managing the property of another.

If the person you choose as your successor trustee is not very sophisticated in making decisions about money or investments, you could be subjecting that person to a lawsuit by the beneficiaries, even though she was doing the best job possible under the circumstances.

It can be a sticky situation for your spouse if you name him as successor trustee and you have children from a previous marriage. For instance, let's say you name your second spouse as successor trustee, and you name your children from a former marriage as beneficiaries of your trust assets after your second spouse is gone. If the trust assets go down in value, your children may become angry and sue your spouse for not managing the trust assets in a reasonably prudent manner.

Duties to the Beneficiaries

As you know, your trustee must follow the specific instructions you have put in your trust document. But if you choose to give your trustee discretion regarding what trust property to distribute or when to make the distributions, your trustee must exercise her discretionary powers in a reasonably prudent manner. The more specific your instructions are, the easier it will be for your trustee to follow those instructions.