Trustee Duties and Responsibilities

The Trustee's Role

A trustee is a fiduciary — someone who holds and manages property for the benefit of others. When you accept the role of trustee, you take on significant legal obligations to the trust's beneficiaries. These obligations are defined by the trust document itself, by the Nebraska Uniform Trust Code (Neb. Rev. Stat. §§ 30-3801 et seq.) or the Iowa Trust Code (Iowa Code ch. 633A), and by the common law of trusts.

Unlike a personal representative, whose role ends when the estate is closed, a trustee may serve for years or decades — particularly when the trust holds assets for minor children or provides for ongoing distributions. Understanding your duties from the outset is essential to protecting yourself from personal liability and serving the beneficiaries effectively.

Core Fiduciary Duties of a Trustee

Duty of Loyalty

The duty of loyalty requires a trustee to administer the trust solely in the interest of the beneficiaries. A trustee must not engage in self-dealing — transactions in which the trustee has a personal interest that conflicts with the interests of the beneficiaries. Under both the Nebraska and Iowa trust codes, self-dealing transactions are presumptively voidable, and the trustee may be required to restore any profit made from such a transaction to the trust.

Duty of Impartiality

When a trust has multiple beneficiaries — for example, a current income beneficiary and a remainder beneficiary — the trustee must act impartially and balance the interests of all beneficiaries. This duty has practical implications for investment decisions: a trustee cannot invest entirely in high-yield assets that benefit the income beneficiary at the expense of the remainder beneficiary, or vice versa.

Duty of Prudence

The duty of prudence requires a trustee to administer the trust with the care, skill, and caution that a person of ordinary prudence would exercise in dealing with their own affairs. A trustee with special skills — such as a financial professional — is held to a higher standard. The duty of prudence applies to all aspects of trust administration, not just investment management.

Duty to Inform and Account

Both the Nebraska and Iowa trust codes impose affirmative duties on trustees to keep beneficiaries reasonably informed about the trust and its administration. Specific obligations include:

• Notifying qualified beneficiaries of the existence of the trust and the trustee's identity within a reasonable time after accepting the trusteeship
• Providing beneficiaries with a copy of the trust document upon request
• Providing annual accountings showing trust assets, liabilities, receipts, disbursements, and distributions
• Promptly responding to reasonable requests for information from beneficiaries

Duty to Keep Trust Property Separate

A trustee must keep trust assets separate from their own personal assets and from the assets of any other trust they administer. Commingling trust assets with personal assets is a serious breach of fiduciary duty and can expose the trustee to personal liability.

Duty to Enforce and Defend Claims

A trustee has a duty to take reasonable steps to enforce claims belonging to the trust and to defend the trust against claims that could diminish trust assets. This may include pursuing legal action on behalf of the trust or defending against lawsuits brought against the trust.

The Prudent Investor Standard

Both Nebraska and Iowa have adopted versions of the Uniform Prudent Investor Act, which establishes the standard for trustee investment decisions. Under this standard, a trustee must:

• Consider the overall investment strategy and portfolio, not individual investments in isolation
• Diversify trust investments unless the trust document or circumstances justify a different approach
• Balance risk and return in a manner consistent with the trust's purposes and the needs of all beneficiaries
• Consider relevant factors including the trust's purposes, distribution requirements, time horizon, liquidity needs, and tax consequences
• Review the trust's investment portfolio within a reasonable time after accepting the trusteeship and bring it into compliance with the prudent investor standard

A trustee may delegate investment management to a qualified agent, but must exercise care in selecting the agent, defining the scope of the delegation, and monitoring the agent's performance.

Consequences of Breach of Fiduciary Duty

A trustee who breaches their fiduciary duties may be held personally liable to the beneficiaries for any resulting loss. Remedies available to beneficiaries under Nebraska and Iowa law include:

• Requiring the trustee to restore the trust to the position it would have been in but for the breach
• Requiring the trustee to disgorge any profit made from the breach
• Surcharging the trustee for losses caused by the breach
• Removing the trustee and appointing a successor
• Voiding transactions entered into in breach of the duty of loyalty

A trustee who is uncertain about whether a proposed action is consistent with their duties should consult an attorney before proceeding. It is far less costly to seek guidance in advance than to defend a breach-of-fiduciary-duty claim after the fact.

Trustee Duties vs. Personal Representative Duties

Trustees and personal representatives share many fiduciary obligations — both must act in the interest of beneficiaries, manage assets prudently, and account for their actions. The key differences are:

• A personal representative's role is temporary — it ends when the estate is closed. A trustee's role may continue for years or decades.
• Probate is court-supervised; trust administration is generally private and does not require court involvement unless a dispute arises.
• A personal representative administers assets that were owned in the decedent's name alone. A trustee administers assets that were transferred into the trust during the grantor's lifetime or at death.

See our guide to personal representative duties for a comparison.

Frequently Asked Questions