Delegating, agents and power holders for a North Carolina trustee

What may be delegated

N.C. Gen. Stat. § 36C-8-807(a) provides that a trustee may delegate duties and powers that a prudent trustee of comparable skills could properly delegate, exercising reasonable care, skill and caution in selecting the agent, establishing the scope and terms of the delegation consistent with the trust's purposes and terms, and periodically reviewing the agent's actions. The specific powers include employing agents, auditors, accountants, brokers, attorneys, investment advisors, appraisers and custodians (N.C. Gen. Stat. § 36C-8-816(27)).

The agent's duty and the trustee's protection

An agent performing a delegated function owes the trust a duty of reasonable care to comply with the delegation's terms; a trustee who delegated with the care the section describes is not liable for the agent's actions; and an agent accepting a delegation from the trustee of a trust subject to North Carolina law submits to North Carolina's courts (N.C. Gen. Stat. § 36C-8-807(b)–(d)).

When a power holder directs

The trust's terms may give a power holder — a person other than a trustee — the power to direct or consent to investments, distributions or other administration (N.C. Gen. Stat. §§ 36C-8A-1, 36C-8A-2). The trustee acts in accordance with the direction and is not liable for complying unless compliance is intentional misconduct; has no duty to monitor the power holder; and is not liable where a consent is not given within a reasonable time after a timely request (N.C. Gen. Stat. § 36C-8A-4).

While the trust is revocable

While a trust is revocable, its settlor may direct or consent to the trustee's actions whether or not the terms give that power, and the trustee following the settlor's direction is not liable for the loss it causes (N.C. Gen. Stat. § 36C-8-808).

The statutes, verbatim

• Delegation by trustee

  N.C. Gen. Stat. § 36C-8-807 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

• Powers of the settlor to direct or consent to the trustee's actions

  N.C. Gen. Stat. § 36C-8-808 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

• Powers of a power holder

  N.C. Gen. Stat. § 36C-8A-2 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

• Duty and liability of the trustee where a power holder serves

  N.C. Gen. Stat. § 36C-8A-4 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

Common questions

Frequently asked questions

Can a North Carolina trustee hire an investment adviser?

Yes, where a prudent trustee of comparable skills could properly delegate the function, with reasonable care in selecting the adviser, setting the terms and reviewing the adviser's performance (N.C. Gen. Stat. § 36C-8-807(a)).

Is a North Carolina trustee liable for an agent's mistakes?

Not where the trustee delegated with the care N.C. Gen. Stat. § 36C-8-807(a) describes (N.C. Gen. Stat. § 36C-8-807(c)).

Does a North Carolina trustee have to follow a power holder?

Where the terms give a power holder a power to direct, the trustee acts in accordance with the direction and is not liable for complying unless compliance is intentional misconduct (N.C. Gen. Stat. § 36C-8A-4(a)).

General information about North Carolina law, not legal advice.