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Accountability of trustee

The law imposes strict obligations and rules on trustees including a duty to account for any benefits the trustee may have gained directly or indirectly from a trust. This goes beyond fraudulent abuse of position by a trustee. There is a basic rule that a trustee may not derive any advantage directly or indirectly from a trust unless expressly permitted by the trust, for example, where he is a professional trustee and the trust provides specifically for a right to make reasonable charges for services. However, full disclosure of the basis and amount of charges is required. Accordingly a professional trustee who derives some other indirect commercial advantage which is not fully disclosed and approved will be acting in breach of trust. This appears to be something which some institutional trustees forming part of larger commercial groups sometimes overlook where, for example, a trustee company arranges for trust investments to be handled by a fund management company within the same group and fees are charged for this service without authority in the trust document. Independent trust companies who do not give investment advice, on the other hand, are able to place money for investment without favor and switch from one investment adviser to another as performance or circumstances dictate whereas it is rare for the larger institution to use anybody other than their own associated companies for investment irrespective of performance.