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Legal Memorandum: Executor or Trustee's Power to Delegate Authority

Issue: Under New York law, to what extent may an executor or trustee of an estate delegate to another the duty to perform tasks it has the obligation to perform for the estate?

Area of Law: Estate Planning & Probate
Keywords: An executor or trustee of an estate; Delegation of fiduciary authority
Jurisdiction: New York
Cited Cases: 243 N.Y.S. 366; 753 N.Y.S.2d 675
Cited Statutes: Restatement (Second) of Trusts § 171 (1992)
Date: 10/01/2009

In Estate of Faust, 237 N.Y.L.J. 42 (Sur. Ct. 2007), the court cited favorably to Restatement (Second) of Trusts, which addresses the issue of “Duty with Respect to Delegation.”  The general rule provides that a fiduciary with duties to beneficiaries has the obligation to “personally perform the responsibilities of the trusteeship except as a prudent person might delegate those responsibilities to others.  In deciding whether, to whom and in what manner to delegate fiduciary authority . . . the trustee is under a duty to beneficiaries to exercise fiduciary discretion and to act as a prudent person would act in similar circumstances.”  Restatement (Second) of Trusts § 171 (1992).  “A fiduciary’s discretionary authority may be abused by both a failure to delegate or in the degree or manner of delegation.  Id., cmt. a (emphasis added).  “Prudence” requires the exercise of skill, caution, and care in “negotiating and establishing the terms of delegation.”  Id.

A trustee cannot delegate the entire administration of a trust to another person, unless authorized by the terms of the trust.  Id., cmt. e. However, delegation is not limited to ministerial acts.  Id., cmt. f. “In appropriate circumstances delegation may extend, for example, to discretionary acts,” such as the selection of investments, management of specialized investment programs, and “to other activities of administration involving significant judgment.”  Id.  “A delegation of fiduciary authority is proper when it is reasonably intended to further sound administration.”  Id.

It is not a breach of fiduciary duty to the beneficiary “to […]

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