Duties of a Trustee – Arizona’s Go To Trust Attorneys

In Arizona, there is a lot to navigate when choosing the right Trust Attorney. The individual or entity in charge of administering a trust is called the “trustee.” The trustee is bound by provisions of the trust, as well as Arizona law which imposes on the trustee several obligations commonly referred to as “fiduciary duties.” The duties of the trustee include but are not limited to: 

1. Duty to Administer. A trustee must administer the trust in good faith, in accordance with its terms and the interests of the beneficiaries. A.R.S. 14-10801. 

2. Duty of Loyalty. A trustee must administer the trust solely in the interests of the beneficiaries. A.R.S. 14-10802. 

3. Duty of Impartiality. A trustee must act impartially in investing, managing, and distributing the trust property with regard to the beneficiaries’ interests. A.R.S. 14-10803. 

4. Duty of Prudent Administration. A trustee must administer the trust as a prudent person would, using reasonable care, skill, and caution. A.R.S. 14-10804. 

5. Duty to Comply with the Prudent Investor Rule. A.R.S. 14-10901, et seq. 

6. Duty to Incur Only Reasonable Costs. A.R.S. 14-10805. 

7. Duty to Use Special Skills. A.R.S. 14-10806. 

8.  Duty to Control and Protect Trust Property. A.R.S. 14-10809. 

9. Duty to Keep Records and Identify Trust Property. A.R.S. 14-10810. 

10. Duty to Enforce and Defend the Trust’s Claims. A.R.S. 14-10811. 

11. Duty to Collect Trust Property. A trustee must take reasonable steps to compel delivery of trust property and to redress a breach of trust known to the trustee to have been committed by a former trustee. A.R.S. 14-10812. 

12. Duty to Inform and Report Trust-related information to Beneficiaries. A.R.S. 14-10813. 

Administering a trust is a serious responsibility. Where appropriate and necessary, a trustee may and should seek legal counsel in administering a trust.

What Does a Trustee Do in Arizona?

A trustee is responsible for managing and distributing assets held in a trust according to the trust’s instructions and Arizona law. These responsibilities may include overseeing real estate, managing financial accounts, paying outstanding expenses, maintaining accurate records, and distributing assets to beneficiaries.

Trustees have a fiduciary responsibility, meaning they must act in the best interests of the beneficiaries rather than for their own personal benefit. Arizona’s trust laws establish standards for how trustees must manage assets, communicate with beneficiaries, and make financial decisions.

Whether you are serving as a trustee for the first time or have been named as a successor trustee in a family member’s estate plan, understanding these responsibilities is essential to avoiding disputes and potential legal liability.

What Are the Responsibilities of a Successor Trustee After Someone Dies?

When the creator of a revocable living trust passes away, the successor trustee typically assumes responsibility for administering the trust, provided the trust document designates that person to serve.

The successor trustee’s responsibilities may include:

1. Reviewing the trust document: Understanding the trust’s provisions, identifying beneficiaries, and determining how assets should be managed or distributed.
2. Identifying and securing trust assets: Locating bank accounts, investments, real estate, and other property owned by the trust.
3. Notifying beneficiaries: Providing required notices and information in accordance with Arizona trust law.
4. Managing financial obligations: Addressing applicable debts, expenses, and tax responsibilities associated with trust administration.
5. Maintaining accurate records: Documenting transactions, distributions, expenses, and other financial activities.
6. Distributing trust assets: Transferring property to beneficiaries according to the trust’s instructions and applicable law.

A successor trustee must carefully follow the trust’s provisions while complying with the Arizona Trust Code. Depending on the complexity of the estate, consulting an Arizona trust administration attorney can help ensure that these responsibilities are handled appropriately.

Can a Trustee Be Held Personally Liable in Arizona?

Yes. Under Arizona law, trustees may be held personally liable when they breach their fiduciary duties and cause financial harm to the trust or its beneficiaries.

Examples of potential trustee misconduct include:

• Using trust funds for personal expenses.
• Failing to properly account for trust assets.
• Making unauthorized distributions to beneficiaries.
• Mismanaging investments or failing to protect trust property.
• Engaging in prohibited conflicts of interest.
• Refusing to provide information that beneficiaries are legally entitled to receive.

Under Arizona Revised Statutes § 14-11001, courts have several remedies available when a trustee breaches their duties. Depending on the circumstances, a court may order the trustee to provide an accounting, restore improperly used assets, compensate the trust for losses, or be removed from their position.

Not every financial loss constitutes a breach of trust. Whether a trustee is liable depends on the trustee’s conduct, the trust’s terms, applicable law, and the circumstances surrounding the decision.

How Can Beneficiaries Protect Their Rights Under an Arizona Trust?

Trust beneficiaries have certain legal rights designed to promote transparency and accountability during trust administration.

Under A.R.S. § 14-10813, trustees generally must keep qualified beneficiaries reasonably informed about trust administration, subject to the trust’s provisions and applicable exceptions. Beneficiaries may also have rights to receive relevant portions of the trust document and financial reports.

If beneficiaries suspect that a trustee is mismanaging assets or violating fiduciary obligations, they may have grounds to seek legal remedies.

An experienced Arizona trust litigation attorney can help beneficiaries evaluate their rights, review trust records, and determine whether legal action is appropriate.

Frequently Asked Questions About Trustee Duties in Arizona

Does a trustee have to provide an accounting to beneficiaries in Arizona?

Arizona law generally requires trustees to provide certain beneficiaries with reports about trust property, liabilities, income, expenses, and distributions at least annually and when the trust terminates. The specific requirements depend on the trust document, the beneficiary’s status, and applicable law. See A.R.S. § 14-10813.

Can a trustee also be a beneficiary in Arizona?

Yes. A trustee can also be a beneficiary of the same trust. However, the trustee must still comply with fiduciary obligations, including duties of loyalty and impartiality. Serving in both roles does not automatically create a breach of trust.

Can a trustee sell property held in a trust?

Generally, a trustee may sell trust-owned property when authorized by the trust document and applicable Arizona law. However, the trustee must act consistently with fiduciary duties and consider the interests of the beneficiaries.

Can beneficiaries remove a trustee in Arizona?

Yes, under certain circumstances. Arizona Revised Statutes § 14-10706 allows a court to remove a trustee for reasons that may include a serious breach of trust, lack of cooperation among co-trustees that substantially impairs administration, or other qualifying circumstances.

How much can a trustee charge in Arizona?

Under A.R.S. § 14-10708, a trustee is generally entitled to compensation specified in the trust document. If the document does not specify compensation, the trustee is entitled to reasonable compensation under the circumstances.

How long does a trustee have to distribute assets in Arizona?

Arizona does not establish one universal deadline for every trust distribution. The timeline depends on the trust’s terms, outstanding obligations, tax considerations, and the complexity of the assets. Trustees are generally expected to administer and distribute trust property without unreasonable delay.

Speak With an Arizona Trust Administration Attorney

Serving as a trustee involves important legal and financial responsibilities. Mistakes in administering a trust can lead to disagreements among beneficiaries, unexpected expenses, and potential litigation.

At Copper Canyon Law, our Arizona attorneys assist clients with trust administration, fiduciary disputes, estate planning, and trust litigation. Whether you are a successor trustee seeking guidance or a beneficiary concerned about how a trust is being managed, our legal team can help you understand your rights and obligations.

Contact Cody Huffaker, Stephen Rogers, or Brian Fillmore at Copper Canyon Law

Cody Huffaker is a founding member of Copper Canyon Law. Cody’s practice focuses on trust and estate litigation, business litigation and dispute resolution, and construction litigation. Cody has significant experience in will contest litigation, both defending and contesting the validity of wills. 

This information is provided for general educational purposes and does not constitute legal advice. Trust administration requirements vary depending on the trust document and individual circumstances.