Trustee Skills and the Standard of Care

1. The trustee's baseline standard of care is that of a person of ordinary prudence in the management of the person's own affairs, as adapted to the fiduciary office. UTC § 804; Restatement (Third) of Trusts § 77.
2. A trustee who possesses special skills or expertise, or who is named in reliance upon a representation of such skills or expertise, is held to a standard that requires the exercise of those abilities. UTC § 806; Restatement (Third) § 77(3).
3. The special-skills rule elevates, but does not displace, the prudent-person standard: the trustee must always meet the ordinary standard, and, where applicable, the additional standard measured by the trustee's actual or represented competence.
4. Corporate trustees, trust companies, and other institutional fiduciaries invariably hold themselves out as possessing specialized skills and are measured against the standard of care that competent institutions in their line of business exercise.
5. Professional trustees — attorneys, accountants, investment advisers, and other regulated professionals — are held to the standard of care of a reasonably competent practitioner of their profession when they administer the trust.
6. The standard is primarily objective: the reference point is the reasonably competent trustee possessing the same skills or expertise, not the subjective belief or effort of the particular trustee.
7. A trustee's actual knowledge and experience aggravate, but do not mitigate, the standard: a trustee may not defend a breach on the ground that the trustee's own competence fell short of the represented level.
8. The special-skills rule interacts with the duty to delegate: where a task exceeds the trustee's competence, delegation to a qualified agent under UTC § 807 may be required, not merely permitted.
9. Reliance upon experts, when reasonable and prudently obtained, may satisfy the standard of care; but reliance on a plainly inadequate expert, or continued reliance in the face of contrary indications, is itself a breach.
10. Judicial review of trustee competence is conducted at the time of the decision and on the record then available; hindsight is not the measure, but the trustee's actual and represented skills are.

Upon completing this chapter, the reader should be able to:

1. State the doctrinal content of the special-skills rule under UTC § 806 and Restatement (Third) § 77.
2. Distinguish the prudent-person baseline from the heightened standard applicable to trustees with special skills or expertise.
3. Identify the categories of trustee — individual, professional, corporate, institutional — to which the special-skills rule ordinarily applies.
4. Analyze whether a particular representation, holding-out, or professional status triggers the special-skills rule.
5. Apply the objective standard to a claim of breach founded on inadequate expertise.
6. Determine when a trustee is required to delegate a specialized function rather than perform it personally.
7. Evaluate the reasonableness of a trustee's reliance on outside experts.
8. Advise settlors on the drafting of trust instruments where the intended trustee lacks specific expertise.
9. Diagnose common misconceptions about trustee expertise, including the belief that an unpaid or lay trustee is held to a lower standard.
10. Prepare and evaluate the record required to demonstrate — or to challenge — the exercise of trustee skill.

• Uniform Trust Code § 806 (trustee's skills); § 804 (prudent administration); § 807 (delegation by trustee); § 105 (default and mandatory rules); § 1001 (remedies for breach of trust); § 1008 (exculpation).
• Restatement (Third) of Trusts §§ 77 (standard of care), 78 (duty of loyalty), 79 (impartiality), 80 (delegation), 90 (prudent investor rule).
• Restatement (Second) of Trusts §§ 174 (duty to exercise skill), 175 (duty to take control of trust property), 227 (investment).
• Uniform Prudent Investor Act §§ 2 (standard of care), 9 (delegation of investment and management functions).
• Leading state trust statutes implementing UTC § 806: Cal. Prob. Code § 16014; Fla. Stat. § 736.0806; N.Y. Est. Powers & Trusts Law § 11-2.3; Tex. Prop. Code § 117.004; Ohio Rev. Code § 5808.06; Va. Code § 64.2-767.
• Landmark decisions: In re Bank of New York, 35 N.Y.2d 512 (1974); Estate of Beach, 15 Cal. 3d 623 (1975); First Alabama Bank of Montgomery, N.A. v. Martin, 425 So. 2d 415 (Ala. 1982); Stark v. United States Trust Co., 445 F. Supp. 670 (S.D.N.Y. 1978); In re Estate of Janes, 90 N.Y.2d 41 (1997); In re Chase Manhattan Bank, 26 A.D.3d 824 (N.Y. App. Div. 2006); Wood v. U.S. Bank, N.A., 828 N.E.2d 1072 (Ohio Ct. App. 2005).

• Austin Wakeman Scott, William Franklin Fratcher & Mark L. Ascher, Scott and Ascher on Trusts (5th ed.) §§ 17.6, 19.3 (skill and the standard of care).
• George Gleason Bogert, George Taylor Bogert & Amy Morris Hess, The Law of Trusts and Trustees (3d ed. & Supp.) §§ 541–544 (trustee's skill and standard of care).
• Charles E. Rounds Jr. & Charles E. Rounds III, Loring and Rounds: A Trustee's Handbook (current ed.), ch. 6 (fiduciary duties; standard of care).
• Robert H. Sitkoff & Jesse Dukeminier, Wills, Trusts, and Estates (11th ed.), chapters on trust administration and prudent investment.
• John H. Langbein, Reversing the Nondelegation Rule of Trust-Investment Law, 59 Mo. L. Rev. 105 (1994).
• Jeffrey N. Pennell, Professional Trustee Liability, ACTEC Law Journal (recurring).
• Restatement (Third) of Trusts, Reporter's Notes to §§ 77 and 90.
• ACTEC Commentaries on the Standard of Care and Delegation (current edition).

The trustee's office is not merely custodial. It requires the exercise of judgment, the deployment of skill, and the application of knowledge to the particular circumstances of the trust and its beneficiaries. From the earliest articulations of the office in English equity, the courts recognized that a trustee who accepted the office undertook to perform it competently — not merely honestly, and not merely diligently. Competence, understood as the possession and exercise of the skills appropriate to the office, is a constitutive component of fiduciary administration. UTC §§ 804, 806; Restatement (Third) of Trusts § 77.

This chapter examines the doctrinal architecture by which the law measures trustee competence. The examination proceeds from the baseline prudent-person standard, through the elevated standard applicable to trustees possessing or representing special skills, to the standards of care governing professional and corporate fiduciaries, to the interaction of the standard with the trustee's power to delegate. Throughout, the emphasis is on the objective character of the standard, the record on which competence is measured, and the remedies available where competence has failed.

Skill is analytically distinct from diligence and from loyalty, though the three are often engaged together in the analysis of a single breach. Loyalty concerns the interests the trustee serves; diligence concerns the effort and attention the trustee brings to the office; skill concerns the competence with which the office is discharged. A trustee may be perfectly loyal and diligent and still commit a breach by acting incompetently; conversely, a highly skilled trustee may commit a breach through disloyalty or inattention.

The three components operate in tandem. The duty of loyalty (UTC § 802; Restatement (Third) § 78) requires that the trustee's competence be directed to the beneficiaries' interests. The duty of prudent administration (UTC § 804; Restatement (Third) § 77) requires that the trustee's competence be actually exercised. The special-skills rule (UTC § 806; Restatement (Third) § 77(3)) requires that the level of competence be measured against the trustee's actual and represented abilities. Together they define the fiduciary office as one of loyal, prudent, and competent administration.

English equity established from an early date that the trustee's undertaking of office implied a promise to administer with the skill appropriate to the character of the trust. The classic formulation appeared in Speight v. Gaunt, 9 App. Cas. 1 (H.L. 1883), in which Lord Blackburn observed that a trustee must act as an ordinary prudent man of business would act in the management of his own affairs. The formulation was directed principally at the standard of ordinary prudence, but it carried within it the recognition that ordinary prudence is measured in relation to the character of the transaction and, implicitly, the competence of the actor.

Later English cases refined the doctrine to distinguish between the ordinary trustee and the trustee who held himself out as possessing particular skills. In Bartlett v. Barclays Bank Trust Co. [1980] Ch 515, the court held that a corporate trust company, holding itself out as possessing specialized expertise in trust administration, was to be held to a higher standard than an ordinary lay trustee. The rule of Bartlett has been widely followed, both in the Commonwealth and, by way of doctrinal influence, in American jurisdictions applying the special-skills rule.

American trust law adopted the English baseline and, through the Restatements, refined it into the modern two-part rule. The Restatement (Second) of Trusts § 174 (1959) provided that the trustee is under a duty to the beneficiary in administering the trust to exercise such care and skill as a man of ordinary prudence would exercise in dealing with his own property, and, if the trustee has greater skill than that of a man of ordinary prudence, to exercise such skill as he has. The provision codified two propositions: the ordinary standard is a floor, and the trustee's actual skill, where greater, is a ceiling above which the trustee may not fall.

The Restatement (Third) of Trusts § 77(3) extended the doctrine to the trustee who is named in reliance upon a representation of special skills or expertise. The extension recognizes that the settlor and the beneficiaries may have chosen the trustee precisely because of the representations made — a corporate trustee's brochure, an attorney's professional credentials, an investment adviser's track record — and that those representations are constitutive of the standard against which the trustee's administration is measured.

The Uniform Trust Code, adopted in 2000, codifies the special-skills rule in § 806: A trustee who has special skills or expertise, or is named trustee in reliance upon the trustee's representation that the trustee has special skills or expertise, shall use those special skills or expertise. The Official Comment to § 806 confirms that the section applies to trustees possessing skills in fact and to trustees named in reliance upon a representation; that corporate fiduciaries are ordinarily within the section by reason of their holding-out; and that the section elevates but does not displace the prudent-person standard of § 804.

Nearly every American jurisdiction that has enacted the UTC has adopted § 806 without substantial variation. See Cal. Prob. Code § 16014; Fla. Stat. § 736.0806; N.Y. Est. Powers & Trusts Law § 11-2.3 (in the investment context); Tex. Prop. Code § 117.004; Ohio Rev. Code § 5808.06. The uniformity of adoption reflects the widely shared understanding that the trustee's skills — actual and represented — are part of the fiduciary bargain that the office establishes.

The prudent-person standard is the doctrinal floor beneath which no trustee's competence may fall. UTC § 804 provides that a trustee shall administer the trust as a prudent person would, by considering the purposes, terms, distributional requirements, and other circumstances of the trust, and, in satisfying this standard, the trustee shall exercise reasonable care, skill, and caution. Restatement (Third) § 77 states the same rule in essentially equivalent terms.

The prudent-person standard is an objective standard measured by reference to the reasonably competent trustee. It is not defined by the trustee's subjective belief, by the trustee's personal understanding of the office, or by the good-faith exertion of the trustee's own capacities. A trustee who lacks the capacities of the reasonably prudent trustee does not thereby escape the standard; the trustee is simply held to a standard the trustee cannot meet, with the ordinary consequences of breach following as a matter of course.

The corollary is important: a trustee who is uncertain of the trustee's capacity to meet the ordinary standard is not thereby excused from the office; the trustee must either decline the appointment, resign, or take the steps — including delegation to competent agents — necessary to bring the administration up to the required standard.

The prudent-person standard is customarily decomposed into three elements: reasonable care, reasonable skill, and reasonable caution. UTC § 804; Restatement (Third) § 77 cmts. b–d. Care concerns the diligence and attention the trustee brings to the office. Skill concerns the competence with which the trustee administers. Caution concerns the trustee's disposition toward risk in the discharge of the office.

The three elements are analytically distinct but operationally integrated. A prudent trustee brings appropriate care to the identification of the relevant issues, appropriate skill to their analysis and resolution, and appropriate caution to the balance of risk against expected return. Failures in any of the three components may sustain a claim of breach; and a single course of conduct may involve failures in more than one.

The prudent-person standard is not applied in a vacuum. UTC § 804 requires that the trustee consider the purposes, terms, distributional requirements, and other circumstances of the trust. The standard is thus a contextual one: what is prudent for a trust holding a diversified marketable portfolio is not what is prudent for a trust holding closely-held business interests, undeveloped real property, or intangible intellectual property. The circumstances of the trust shape the content of the standard.

The contextual character of the standard has an important consequence for the special-skills rule. Where the character of the trust requires specialized expertise — the operation of a family business, the management of oil and gas interests, the administration of a portfolio of art or collectibles — the trustee is required to bring that expertise to bear, either personally or through appropriate delegation. A trustee who accepts such an office without either the requisite skills or the intention to obtain them commits a breach at the moment of acceptance.

UTC § 806 provides: A trustee who has special skills or expertise, or is named trustee in reliance upon the trustee's representation that the trustee has special skills or expertise, shall use those special skills or expertise. The rule contains two distinct triggers — actual possession of special skills and representation of special skills upon which the appointment relied — and imposes a single obligation: the trustee shall use them.

The first trigger is factual. A trustee who in fact possesses skills or expertise beyond those of the ordinary prudent trustee — whether through professional training, business experience, licensure, or specialized knowledge — must bring those skills to bear. The trustee's actual competence is not a private endowment; once the trustee accepts the office, it becomes part of the standard against which the administration is measured. Restatement (Third) § 77(3).

The second trigger is relational. A trustee named in reliance upon a representation of special skills — a corporate trustee's brochure, a professional's credentials, an investment adviser's stated expertise — must administer to the level of that representation, whether or not the actual skill matches the represented skill. The representation is treated as constitutive of the fiduciary undertaking.

A trustee possesses special skills where the trustee has training, experience, licensure, or other capacities beyond those of the ordinary prudent lay trustee, and where those capacities are relevant to the administration of the trust. A retired investment banker serving as trustee of a family trust that holds substantial investment assets, a certified public accountant serving as trustee of a trust that requires ongoing tax analysis, or a real estate broker serving as trustee of a trust holding developed property — each possesses special skills that the office requires be exercised.

The rule attaches whether the trustee is compensated or not, whether the trustee is a family member or a stranger, and whether the trustee's competence was known to the settlor at the time of appointment. Once the trustee has the skill and accepts the office, the trustee must use the skill. Restatement (Third) § 77 cmt. d. The Official Comment to UTC § 806 confirms that the rule reaches lay trustees who possess relevant expertise; the frequently expressed intuition that unpaid family trustees are held to a lower standard is misplaced.

The second branch of UTC § 806 addresses trustees named in reliance upon a representation of special skills. The paradigmatic case is the corporate trustee that holds itself out — in brochures, marketing materials, sales presentations, and website content — as possessing specialized expertise in trust administration, investment management, and fiduciary services. The Official Comment to UTC § 806 identifies corporate fiduciaries as ordinarily within the section for this reason.

The representation branch also reaches individual professionals who are named in reliance upon their professional standing. An attorney whose practice includes estate planning and who is named trustee by a client for whom the attorney drafted the trust; an accountant named trustee because of professional financial competence; an investment adviser named trustee because of investment expertise — each has been named in reliance upon a representation of skill, and each is held to the corresponding standard.

The doctrinal significance of the representation branch is that it does not require proof of actual competence at the represented level. The representation itself defines the standard. A corporate trustee that markets itself as providing specialized fiduciary services is held to the standard of a competent institution providing such services, regardless of whether the particular officers assigned to the account meet that standard in fact.

Corporate trustees — bank trust departments, dedicated trust companies, and other institutional fiduciaries — are the paradigmatic special-skills trustees. They are chartered, regulated, staffed, and marketed as providers of specialized fiduciary services. The Official Comment to UTC § 806 confirms that corporate fiduciaries are ordinarily within the special-skills rule.

The standard of care applicable to a corporate trustee is that of a reasonably competent institution providing fiduciary services under comparable circumstances. Bartlett v. Barclays Bank Trust Co. [1980] Ch 515, though English, is widely cited for the proposition; American authorities have applied equivalent standards. See First Alabama Bank of Montgomery, N.A. v. Martin, 425 So. 2d 415 (Ala. 1982); Stark v. United States Trust Co., 445 F. Supp. 670 (S.D.N.Y. 1978); In re Estate of Janes, 90 N.Y.2d 41 (1997).

The institutional standard has content. A corporate trustee is expected to maintain trained staff, adequate systems of review and supervision, appropriate policies and procedures, and access to specialized expertise as the trusts under its administration require. Deficiencies in institutional infrastructure — inadequate staffing, absence of review processes, unsupervised delegation — may themselves be breaches of the special-skills standard.

An attorney serving as trustee is ordinarily held to the professional standard applicable to attorneys performing similar functions. The attorney's professional training — in the law of trusts, in fiduciary duty, in tax analysis, in drafting and interpreting instruments — is a special skill that must be exercised. Restatement (Third) § 77 cmt. d; ACTEC Commentaries on the Standard of Care (current edition).

The attorney-trustee's professional standard imposes affirmative obligations. Where a legal issue arises within the attorney's expertise, the attorney-trustee must analyze it competently rather than reflexively delegate it to outside counsel. Where the issue lies outside the attorney's expertise — a specialized tax matter for a general practitioner, a complex investment question for a probate lawyer — appropriate consultation or delegation may be required. The attorney-trustee's competence, and its limits, define the boundary between personal performance and permissible delegation.

Certified public accountants, chartered financial analysts, registered investment advisers, real estate brokers, and other regulated or credentialed professionals are, when named trustee, held to the professional standard applicable to competent practitioners of their profession. The professional certification is not merely a matter of biography; it is a representation upon which the settlor and beneficiaries are entitled to rely.

The consequence is doctrinally important. An accountant-trustee is held to competent standards of tax analysis, financial reporting, and internal controls; a CFA-trustee is held to competent standards of investment analysis and portfolio construction; a real-estate broker-trustee is held to competent standards of property management and valuation. In each case, the professional's day-to-day competence in their field is embedded in the standard of care governing the fiduciary office.

The Uniform Prudent Investor Act, and its adoption in most jurisdictions, superimposes an additional layer of specialized expertise on trustees exercising investment functions. UPIA § 2(f) provides that a trustee who has special skills or expertise, or is named trustee in reliance upon the trustee's representation that the trustee has special skills or expertise, has a duty to use those skills or expertise. The provision is essentially UTC § 806 applied to the investment context.

The interaction of UPIA and UTC § 806 with respect to investment professionals means that a trustee who is or holds out as an investment professional is expected to bring competent investment analysis, portfolio construction, risk management, and performance monitoring to bear. The trustee's investment decisions are measured not by the standard of the ordinary prudent trustee but by the standard of a competent investment professional acting in a fiduciary capacity. Restatement (Third) § 90; UPIA § 2.

The trustee's acceptance of office is the doctrinal moment at which the standard of care attaches. UTC § 701. By accepting, the trustee undertakes to administer the trust in accordance with its terms and in compliance with the fiduciary duties imposed by law — including the duty of prudent administration and, where applicable, the special-skills rule.

The rule has a preventive dimension. A prospective trustee who lacks the skill to administer the particular trust — because of the specialized character of the assets, the complexity of the distributions, or the anticipated ongoing decisions the office will require — is called upon to decline the appointment rather than accept and then fail. The office is voluntary at inception; declining an appointment for lack of skill is a competent, and often the correct, fiduciary judgment.

A trustee who accepts office in reliance upon the trustee's own skill, or upon a representation of skill, is bound by the acceptance. The trustee cannot subsequently defend a breach by arguing that the trustee never actually possessed the skill. The acceptance and the standard travel together.

Before accepting office, a prospective trustee is called upon to assess the trustee's competence in relation to the demands of the particular trust. The assessment is not a formal legal step; it is a matter of ordinary prudence in the fiduciary bargain. A trustee who accepts office without any such assessment — merely because the settlor asked, or because the trustee was flattered by the request — has already begun the administration on unsound footing.

The self-assessment continues into the administration. A trustee who, during the course of administration, encounters demands beyond the trustee's competence is required to respond — through education, consultation, delegation, or, in appropriate cases, resignation. Persisting in an office for which the trustee is not competent, without taking steps to remediate the gap, is itself a form of breach.

The standard of care under UTC §§ 804 and 806 is primarily objective. It is measured by reference to the reasonably competent trustee — the reasonably competent lay trustee under § 804, and the reasonably competent trustee possessing the same skills or expertise under § 806. The trustee's subjective belief that the trustee was acting competently is not the measure; the trustee's good-faith effort is not, alone, a defense.

The objectivity of the standard has an evidentiary consequence. Proof of breach ordinarily proceeds by expert testimony as to what a reasonably competent trustee, possessing the relevant skills, would have done. The particular trustee's understanding, methods, or state of mind become relevant only to the extent they bear on the question whether the trustee's conduct met the objective standard.

The standard has, however, a subjective component: the trustee's actual skills, where they exceed the ordinary standard, raise the applicable standard to that level. A trustee who in fact possesses substantial expertise in the relevant subject may not defend a breach by comparison to the ordinary trustee. The trustee's own skill defines the floor.

The doctrinal asymmetry is important. Special skills, whether possessed or represented, always elevate the standard; they never lower it. A lay trustee who lacks the ordinary prudent trustee's competence is not thereby held to a lower standard; the trustee is held to the ordinary standard and is in breach if the administration falls short. A trustee's incompetence is a source of liability, not a source of exculpation.

Good faith and reasonable effort are relevant to, but not co-extensive with, the standard of care. A trustee who acts in good faith may nevertheless commit a breach through incompetence; a trustee who exerts substantial effort may nevertheless fall short of the standard through absence of skill. UTC § 806 does not authorize a good-faith defense to a claim of inadequate competence. Restatement (Third) § 77 cmt. b.

The interaction with exculpatory provisions in the trust instrument is discussed in Chapter [Trustee Liability]. It is sufficient here to observe that exculpation clauses do not, and under UTC § 1008 cannot, immunize the trustee from liability for conduct that would meet the standard for bad faith or reckless indifference. Nor do they typically excuse gross incompetence, and courts frequently construe exculpation provisions strictly against the trustee who drafted or benefited from them.

The trustee's power to delegate under UTC § 807 interacts with the special-skills rule in a way that requires careful attention. UTC § 807 permits a trustee to delegate duties and powers that a prudent trustee of comparable skills could properly delegate under the circumstances. The trustee retains obligations to exercise reasonable care, skill, and caution in selecting the agent, establishing the scope and terms of the delegation, and periodically reviewing the agent's performance.

Where the trustee possesses special skills relevant to the delegated function, the trustee's obligations in selecting and supervising the agent are correspondingly elevated. A trustee who is an investment professional selecting an outside investment manager is held to a higher standard of manager selection and oversight than a lay trustee performing the same task. The special-skills rule follows the trustee into every aspect of the office, including delegation.

Delegation is not merely a power; in appropriate circumstances, it is a duty. Where a task exceeds the trustee's own competence — the management of a specialized asset, the analysis of a complex legal question, the construction of a diversified investment portfolio — prudent administration may require delegation to a qualified agent. UTC § 807 cmt.; Restatement (Third) §§ 80, 90; UPIA § 9.

The obligation is doctrinally significant. A trustee who lacks the skill to perform a task and who fails to delegate commits a breach not because of the failure to delegate as such, but because the resulting personal performance falls below the standard of care. The delegation obligation is an implication of the standard, not an independent duty; it is the mechanism by which a trustee with limited personal competence may nevertheless discharge the office competently.

A trustee is generally entitled to rely upon the advice of competent experts — attorneys, accountants, investment advisers, appraisers, and other professionals — in the discharge of the office. The reliance is not unconditional. It must be reasonable: the expert must be qualified for the task, selected with appropriate diligence, provided with adequate information, and monitored for continuing competence. Reliance upon a plainly inadequate expert, or continued reliance in the face of indications of the expert's failure, is itself a breach. Restatement (Third) § 77 cmt. e; UTC § 807 cmt.

Reliance does not displace the trustee's judgment. The trustee must understand the advice sufficiently to evaluate whether it responds to the question posed, whether the analysis is competent on its face, and whether the recommended action is consistent with the trust's terms and purposes. A trustee who abdicates judgment to an expert has not delegated a specialized function; the trustee has abdicated the office.

Judicial review of trustee competence is conducted at the time of the decision on the record then available, not with the benefit of hindsight. UTC § 804 cmt.; Restatement (Third) § 77 cmt. c; UPIA § 8. The rule is fundamental: a trustee is not liable for a decision that appeared prudent when made merely because subsequent events proved it costly, nor is a trustee excused from a decision that was imprudent when made merely because subsequent events made it inconsequential.

The time-of-decision rule is a corollary of the standard's objective character. The reasonably competent trustee, at the moment of decision, has only the information then available and the analytical tools then applicable. Retrospective critique on the basis of information the trustee could not have had, or of outcomes the trustee could not have predicted, is not the measure of competence. What the trustee actually knew, actually represented, and actually was capable of — those, viewed as of the moment of decision, are the measures.

A claim of breach founded on inadequate skill ordinarily proceeds through the following analytical steps. First, the plaintiff identifies the applicable standard — the ordinary prudent-person standard under § 804, and, where applicable, the special-skills standard under § 806. Second, the plaintiff establishes the trustee's actual skill or the representation of skill on which the appointment relied. Third, the plaintiff demonstrates, ordinarily through expert testimony, the conduct that a reasonably competent trustee of the relevant character would have undertaken. Fourth, the plaintiff shows the trustee's conduct fell short of that standard. Fifth, the plaintiff establishes causation and damages under UTC §§ 1001–1002.

The trustee's response is symmetric. The trustee may contest the applicability of the special-skills standard, the identification of the relevant reference class, the reasonably-competent-trustee standard of conduct, the sufficiency of the plaintiff's proof of departure, or the trustee's exposure to the resulting losses. Each element requires competent development on the record.

The remedies for breach founded on inadequate skill are the ordinary remedies for breach of trust: surcharge for losses caused by the breach; disgorgement of any profits realized in connection with the breach; adjustment or forfeiture of compensation under UTC § 708 and Restatement (Third) § 100; and, in appropriate cases, removal of the trustee under UTC § 706. Remedies are examined systematically in the Enforcement Part of this Volume.

For present purposes, the important point is that competence-based breach exposes the trustee to the full remedial architecture. The absence of subjective bad faith does not limit the remedy; nor does the trustee's good-faith effort to perform. The measure of loss is what a competent administration would have produced compared to what the trustee's administration in fact produced.

Several misconceptions recur in the literature and in practice concerning trustee skill and the standard of care. First is the belief that an unpaid lay trustee — a family member serving without compensation — is held to a reduced standard. The belief is doctrinally incorrect: UTC § 806 applies to all trustees possessing relevant special skills, whether compensated or not; UTC § 804 applies the ordinary prudent-person standard to all trustees, whether lay or professional. Compensation may bear on the reasonableness of the fees charged, but not on the standard of the administration.

Second is the belief that the special-skills rule imposes a higher standard than the trustee can meet. The rule does not require the trustee to be omniscient; it requires the trustee to use the skills the trustee has, and, where the trustee lacks skill, to obtain competent assistance through delegation. The rule is calibrated to the trustee's actual and represented competence, not to an imagined ideal.

Third is the belief that the special-skills rule renders professional and corporate trusteeship uneconomic by imposing unlimited liability. It does not: it holds the professional trustee to a professional standard, no higher and no lower than the standard applicable to the trustee's profession. The professional trustee's insurance markets, indemnification arrangements, and pricing already reflect that standard.

The trustee who administers competently is well served by building an administrative record that demonstrates competence. The record ordinarily includes: documentation of the trustee's self-assessment at acceptance; identification of the specialized skills the trust requires and how they will be supplied; written engagement letters with experts and delegates; contemporaneous memoranda documenting significant decisions; periodic reviews of delegated functions; and annual reports to the beneficiaries as contemplated by UTC § 813 and Chapter [Duty to Inform].

None of these practices is exceptional. Each is an ordinary implication of competent fiduciary administration. Their cumulative effect is what proper exercise of trustee skill looks like from the outside — the outside from which beneficiaries, courts, and successor trustees will ultimately judge the office.

Chapter 12 turns to the trustee's duty to keep and render adequate records and to communicate meaningfully with the beneficiaries throughout the course of administration. The record-keeping and disclosure duties addressed in Chapter 12 are the institutional context within which the trustee's skill and standard of care examined in this chapter are observed, tested, and, where appropriate, corrected.

• Uniform Trust Code §§ 806, 804, 807, 105, 706, 1001–1002, 1008.
• Restatement (Third) of Trusts §§ 77, 78, 79, 80, 90, 100.
• Restatement (Second) of Trusts §§ 174, 175, 227.
• Uniform Prudent Investor Act §§ 2, 8, 9 (1994).
• Speight v. Gaunt, 9 App. Cas. 1 (H.L. 1883); Bartlett v. Barclays Bank Trust Co. [1980] Ch 515.
• In re Estate of Janes, 90 N.Y.2d 41 (1997); Stark v. United States Trust Co., 445 F. Supp. 670 (S.D.N.Y. 1978); First Alabama Bank of Montgomery, N.A. v. Martin, 425 So. 2d 415 (Ala. 1982).
• Scott and Ascher on Trusts (5th ed.) §§ 17.6, 19.3.
• Bogert, The Law of Trusts and Trustees §§ 541–544.
• Loring and Rounds: A Trustee's Handbook, ch. 6.
• John H. Langbein, Reversing the Nondelegation Rule of Trust-Investment Law, 59 Mo. L. Rev. 105 (1994).
• ACTEC Commentaries on the Standard of Care and Delegation (current edition).