Delegation, agents and professionals under New Jersey law

What may be delegated, the care owed, and the notice

N.J.S.A. 3B:31-60(a) provides that a trustee may delegate duties and powers that a prudent trustee of comparable skills could properly delegate under the circumstances — ministerial, administrative and management functions — exercising reasonable care, skill and caution in selecting an agent, establishing the scope and terms of the delegation in writing, consistent with the purposes and terms of the trust, and periodically reviewing the agent's actions (N.J.S.A. 3B:31-60(b)). N.J.S.A. 3B:31-60(c) provides that a trustee shall provide reasonable written notice to the qualified beneficiaries on each occasion upon which the trustee delegates duties pursuant to the section, including the identity of the agent. A trustee who complies is not liable to the beneficiaries or to the trust for the agent's decisions or actions (N.J.S.A. 3B:31-60(d)); the agent owes the trust the duties the trustee owes and submits to the jurisdiction of the State's courts (N.J.S.A. 3B:31-60(e), (f)). Investment and management functions are delegated under the prudent investor act on the same terms of care, with reasonable advance written notice, on each occasion, to the beneficiaries eligible to receive income on the date of the intended delegation, naming the agent (N.J.S.A. 3B:20-11.10).

Paying for professional help

Among a fiduciary's powers is the power to employ and compensate attorneys, accountants and other agents (N.J.S.A. 3B:14-23); the trust code's general powers add, except as the terms limit them, the powers appropriate to achieve the proper investment, management and distribution of the trust property (N.J.S.A. 3B:31-69(a)), all subject to the fiduciary duties (N.J.S.A. 3B:31-69(b)). A trustee incurs only costs that are reasonable in relation to the trust property, the purposes of the trust and the skills of the trustee (N.J.S.A. 3B:31-58), and is reimbursed for expenses properly incurred, in addition to the compensation allowed (N.J.S.A. 3B:31-53). A transaction involving the investment or management of trust property that the trustee enters into with an agent, accountant or attorney of the trustee is presumed to be affected by a conflict between personal and fiduciary interests (N.J.S.A. 3B:31-55(c)); an attorney who serves as trustee and performs professional services is allowed a counsel fee in addition to commissions (N.J.S.A. 3B:18-6).

Powers to direct, and the investment adviser

While a trust is revocable, the trustee may follow a direction of the settlor that is contrary to the terms of the trust (N.J.S.A. 3B:31-61(a)). Where the terms confer on a person other than the settlor of a revocable trust a power to direct certain actions of the trustee, the trustee acts in accordance with a written exercise of the power unless it is contrary to the terms of the trust or the trustee knows it would constitute a breach of a fiduciary duty the holder owes the beneficiaries (N.J.S.A. 3B:31-61(b)); a holder who is not a beneficiary acts in good faith with regard to the purposes of the trust and the interests of the beneficiaries and is liable for a loss that results from a failure to do so (N.J.S.A. 3B:31-61(d)). Where the instrument gives a person authority to direct, consent to or disapprove investment decisions, that person is an investment adviser and a fiduciary unless the instrument provides otherwise (N.J.S.A. 3B:31-62(a)); a fiduciary who follows the adviser's direction is liable only for its own willful misconduct or gross negligence (N.J.S.A. 3B:31-62(b)), and has no duty to monitor the adviser, to advise or consult with the adviser, or to communicate with, warn or apprise any beneficiary about a direction the fiduciary would have exercised differently (N.J.S.A. 3B:31-62(e)). New Jersey has no separate directed trust act; how a particular instrument divides the work is a question for a licensed New Jersey attorney of your choosing.

החוקים, מילה במילה

• Delegation of investment, management functions by fiduciary

  N.J.S.A. 3B:20-11.10 ↗

  הסבר ברור ופשוט; נוסח החוק המילולי טרם אושר בספרייה שלנו. ראו את החוק הרשמי בקישור למעלה.

• Delegation by trustee

  N.J.S.A. 3B:31-60 ↗

  הסבר ברור ופשוט; נוסח החוק המילולי טרם אושר בספרייה שלנו. ראו את החוק הרשמי בקישור למעלה.

• Powers to direct

  N.J.S.A. 3B:31-61 ↗

  הסבר ברור ופשוט; נוסח החוק המילולי טרם אושר בספרייה שלנו. ראו את החוק הרשמי בקישור למעלה.

• Powers to direct investment functions

  N.J.S.A. 3B:31-62 ↗

  הסבר ברור ופשוט; נוסח החוק המילולי טרם אושר בספרייה שלנו. ראו את החוק הרשמי בקישור למעלה.

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