Introduction

It is a common misconception that all trustees share the same duties and responsibilities. In reality, what a trustee is required to do often depends on the nature of the trust, the terms of the trust deed, or the law that governs it. Still, certain duties are so fundamental that they apply across the board. Drawing partly on the insightful exposition of Leo Okafor in Principles and Practices of Living Trust1, it becomes clear that a trustee is expected to act with care, honesty and sound judgment, just as a prudent person would when managing their own affairs. As Justice Oliver2 once remarked, truly serving the interests of the beneficiaries may demand a level of integrity that reflects the highest standards of commercial morality. This article briefly explores the core duties every trustee must understand and uphold.

Who is a Trustee?

A trustee is a person, organisation, or firm appointed by the Settlor of a trust to hold legal title to property or other assets within the trust and to administer them in accordance with the terms of the trust instrument and the wishes of the Settlor.3 According to Black’s Law Dictionary,4 a Settlor is “a person who creates a trust by a written trust instrument or by a declaration of trust.” The trustee derives legal authority from a trust document, which outlines the purpose of the trust and sets out the trustee’s powers and responsibilities. Those who benefit from the trust are known as Beneficiaries. Trustees may be appointed for various reasons, such as to manage a trust after the Settlor has passed away, to oversee retirement or pension funds, to handle assets in a bankruptcy, or to manage property on behalf of someone unable to do so, such as a minor.

A trustee’s duties depend on the terms of the trust and the nature of its assets. A trust is “a fiduciary relationship with respect to property, subjecting the person by whom the title to the property is held to equitable duties to deal with the property for the benefit of another person”.5 In simpler terms, it is a legal relationship in which one party (the trustee) holds and manages property for the benefit of another (the beneficiary), under instructions set out by the Settlor. For example, if the trust holds rental properties, the trustee must ensure they are properly maintained, tenanted, and generating income. Where the trust includes investments, the trustee is responsible for managing them prudently. In estate planning, trustees play a vital role in preserving assets and ensuring they are used as intended for the benefit of the beneficiaries.

Types of Trustees

Trustees generally fall into three categories, namely:

  • Individual trustees: These are often trusted friends or family members chosen by the Settlor who are believed to be capable of managing the trust’s assets responsibly.
  • Independent trustees: Private businesses, distinct from financial institutions, often specialise in trust management. These firms typically employ investment advisers, accountants, and trust administrators. They are commonly named along the lines of XYZ Trust Company or ABC Wealth and Trust.6
  • Institutional trustees: Typically large financial institutions that offer trust services through experienced professionals who oversee, manage, and invest trust property on behalf of their clients.7

While the exact responsibilities may vary depending on the trust instrument and the nature of the assets involved, there are key duties that every trustee is expected to observe. These core obligations, rooted in good conscience, are explored below:

1. Duty to Keep Accounts:  One of the most important responsibilities a trustee owes to the beneficiaries is the duty to give a clear and honest account of how the trust or estate is being managed. This means keeping proper records, tracking all transactions, and being able to explain how decisions about the trust property were made. It’s a matter of transparency and trust, beneficiaries have a right to know how the assets meant for their benefit are being handled. Where there is more than one trustee, all share the responsibility of ensuring this duty is properly carried out. In the case of Ball v Ball & Anor,8 the Chancery division dismissed a claim by one trustee who was also a beneficiary, brought against two of his co-trustees over an alleged failure to account. The court also gave useful guidance on what amounts to a proper account, making it clear that while trustees are not expected to provide excessive detail, they must give enough information to show that the trust has been managed correctly and in line with their obligations.

2. Duty to Provide Information: Closely linked to the duty to keep proper accounts is the trustee’s duty to provide information, as beneficiaries are entitled to be kept reasonably informed about the trust and its administration. This includes maintaining accurate records such as minutes of meetings, diaries or logbooks, which may be made available to beneficiaries upon request. The purpose of this duty is to promote transparency and allow beneficiaries to hold trustees accountable for the management of the trust. However, where the trust is discretionary in nature, trustees are not obliged to disclose the reasons behind their decisions.9 In such cases, they may refuse a beneficiary access to documents that would reveal the rationale for exercising discretion in a particular way, such as meeting minutes or internal correspondence. This preserves the trustee’s freedom to act in the best interests of the trust without being second-guessed or pressured by disappointed beneficiaries.

3. Duty not to Purchase Trust Property: The sale of trust property by a trustee to himself is governed by what is known as the self-dealing rule. As explained by Megarry VC in Tito v. Waddell (No. 2) [1977] Ch. 106, this rule provides that where a trustee purchases trust property for himself, the sale is voidable at the instance of the beneficiaries, no matter how fair or reasonable the transaction may appear. The rule exists to prevent conflicts of interest and to protect the integrity of the trustee’s duty of loyalty. Likewise, a trustee is not permitted to lease trust property to himself, as doing so is treated as a partial sale and is therefore prohibited under the self-dealing rule. Also, he cannot purchase trust property on behalf of his children, friends or business associates. He cannot repurchase from a third party he has been contracted to sell to so long as the contract remain executory. However, a bona fide sale to a third party in the hope of subsequently acquiring from him is valid provided no agreement existed between the third party and the trustee at the time of sale.

The only recognised exception to this rule is where the trustee seeks and obtains prior approval from the court. The court will only grant such approval after considering the specific circumstances and being satisfied that:

  • The sale is clearly to the benefit of the beneficiaries.
  • The trustee and the beneficiaries are dealing at arm’s length.
  • Full and accurate details of the property’s value have been disclosed.10

4. Duty not to Compete with the Trust: As a general rule, a trustee must not engage in any business that competes with or closely resembles that of the trust, as this would conflict with the fundamental duty of undivided loyalty to the beneficiaries. Even unintentional personal gain can impair the trustee’s judgment, leading to decisions that favour their interests over those of the trust. Courts take this duty seriously and will intervene where a trustee’s impartiality or good faith is in doubt. However, the strict application of this rule is less clear in the case of corporate trustees, who often manage a wide range of businesses for different estates, some of which may overlap. In any event, a trustee facing such a conflict would be well advised to decline the appointment or resign to preserve the integrity of the trust.

5. Duty not to Delegate Trust: A trustee is not permitted to delegate their fiduciary responsibilities. This principle is grounded in the Latin maxim delegatus non potest delegare, which means a delegate cannot delegate. Although trustees are generally expected to carry out their duties personally, however, there is an exception to this rule which is where a trustee engages professionals like solicitors, accountants and stockbrokers for tasks that require specialised expertise. Even so, they remain personally accountable, must give clear instructions, supervise the work and approve the final outcome.11 For example, a trustee may hire an accountant to prepare trust accounts but must still review and sign off on them. Responsibility cannot be passed on. Where there are multiple trustees, each must play an active role and take reasonable steps to prevent breaches by co-trustees. Turning a blind eye is not a defence, as silence or inaction may amount to a breach.

6. Duty towards Maintenance and Advancement: A trustee’s duty of maintenance and advancement falls under their power of distribution and is aimed at supporting both the present and future needs of beneficiaries. Maintenance typically involves using trust income to meet immediate needs such as living expenses, education or healthcare, while advancement allows trustees to apply capital towards a beneficiary’s future opportunities, like setting up a business or furthering education. This power was given statutory backing in the United Kingdom by the Trustees Act 1925.12 Before then, trustees had no authority to use capital for a beneficiary’s benefit unless expressly provided in the trust deed, settlement or by Court order. The Act introduced a general power of advancement, now commonly included in modern trusts.13 However, this power is not automatic; it can be excluded or restricted by the terms of the trust, especially where the Settlor places limits on how much capital can be advanced or indicates a contrary intention. Importantly, the power of maintenance can only be exercised where there is sufficient income in the trust fund for that purpose.

Conclusion 

The role of a trustee in estate planning goes beyond merely managing assets. It involves acting with loyalty, care, and fairness to protect the interests of beneficiaries. Trustees are expected to be transparent, maintain accurate records, and make sound decisions, particularly in discretionary trusts where they are granted some level of judgment. These duties are not only legal obligations; they also reflect a significant moral responsibility that must be taken seriously.14 In Nigeria, the concept of trusts remains relatively underdeveloped and is often viewed as complex or unfamiliar. This partly explains the scarcity of case law on the subject. However, as more individuals begin to appreciate the value of structured wealth transfer and long-term planning, trusts present a powerful means of securing one’s legacy. To unlock the full potential of estate planning in Nigeria, public confidence in the system must be strengthened, beginning with trustees who are dedicated, knowledgeable, and guided by integrity and professionalism.

Author:

John I. Ayeomoni, LL.B, B.L, Associate Patreli Partners, Legal Practitioners and Arbitrators

  1. Published in 2009, prestige books ↩︎
  2. Taylor Fashion Ltd v. Liverpool Victoria Trustees Co. Ltd [1981] 1 All ER 897 ↩︎
  3. The Investopedia team updated 22 May 2025 ↩︎
  4. (11th ed., 2019 ↩︎
  5. Ibid ↩︎
  6. https://www.apw-ifa.co.uk/the-role-of-independent-trustees-in-estate-planning ↩︎
  7. The Investopedia Team 2025 ↩︎
  8. [2020] EWHC 1020 ↩︎
  9. Re Londonderry’s Settlement [1965] Ch. 918 ↩︎
  10. Leo Okafor: Principles & practice of living trust ↩︎
  11. Ibid ↩︎
  12. Section 31, Trustees Act of 1925 ↩︎
  13. legislation.gov.uk ↩︎
  14. Leo Okafor: Principles & practice of living trust p.3 ↩︎