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Fiduciary relationship of trustee

The courts regard a trust as creating a special relationship which places serious and onerous obligations on the trustees. Thus the law regards the special "Fiduciary" relationship of a trust as imposing stringent duties and liabilities on the person in whom confidence is placed - the trustees - in order to prevent possible abuse of that confidence. A trustee is therefore subject to the following rules:


A trustee is not permitted to use or deal with trust property for private direct or indirect advantage. If necessary the court will hold him personally liable to account for any profits made in breach of this obligation.


Trustees must exercise all their powers in the best interests of the beneficiaries of the trust.


Whether or not a trustee is remunerated he must act prudently in the management of trust property and will be liable for breach of trust if, by failing to exercise proper care, the trust fund suffers loss. In the case of a professional the standard of care which the law imposes is higher. Such trustees hold themselves out as having special expertise in trust work and therefore the courts will expect them not simply to act prudently but to exercise skill of a very high standard. Failure to exercise the requisite level of care will constitute a breach of trust for which the trustee will be liable to compensate the beneficiaries. This duty can extend to supervising the activities of a company in which the trustees hold a controlling shareholding.