Trustee Powers: What You're Authorized to Do (and What Requires Court Approval)

One of the first questions every new successor trustee asks: "What exactly am I allowed to do?" The answer comes from two sources — your state's trust code and your specific trust document. Here is how they work together.

State default powers under UTC § 816

The Uniform Trust Code § 816 enumerates specific powers trustees have absent contrary trust provisions. These are the things you can generally do without asking a court or getting beneficiary consent — assuming your trust document doesn't restrict them. Key powers include:

Property management

• Collect trust property — Accept and manage assets that belong to the trust, take possession of property, and receive additions to the trust.
• Sell, exchange, or partition property — Dispose of trust assets at public or private sale, for cash or on credit, without beneficiary approval for each transaction. You do not need permission to sell a stock or piece of real estate — only your own prudent-process documentation.
• Grant options and leases — Enter into leases as landlord or tenant, including leases extending beyond the trust's duration; grant purchase options on trust property.
• Abandon property — Decline to administer or abandon property that has insufficient value to justify collection or continued administration (common for contaminated land or worthless securities).

Financial transactions

• Borrow money — Take out loans on behalf of the trust, with or without pledging trust property as collateral, for terms that may extend beyond the trust's duration.
• Make loans to beneficiaries — Lend trust funds to a beneficiary on terms the trustee considers fair under the circumstances, with a lien on future distributions for repayment.
• Pay expenses and taxes — Compensate yourself as trustee, pay agents and advisors, and pay all expenses of trust administration without separate approval for each payment.¹
• Exercise tax elections — Make federal and state income tax, estate tax, and generation-skipping tax elections on behalf of the trust (including the § 645 election, alternate valuation date, portability election, and Q-elections).

Investment and business

• Invest and reinvest — Buy, sell, and manage investments subject to the Uniform Prudent Investor Act's standards — but without needing permission for each transaction.
• Vote stock and exercise shareholder rights — Vote proxies, pay assessments, hold securities in nominee name, and take all actions a shareholder could take, including approving mergers or dissolutions of held companies.
• Continue operating a business — Operate a sole proprietorship, continue a partnership or LLC membership, or participate in corporate decisions for a business held by the trust.
• Hire agents — Retain attorneys, CPAs, financial advisors, investment managers, real estate agents, appraisers, and other specialists without court approval (addressed in more detail below under delegation).

Closing and distribution

• Prosecute and defend claims — Sue on behalf of the trust, defend the trust against claims, and settle disputes — including settling a creditor claim for less than the amount asserted.
• Distribute in cash or in kind — Distribute trust property to beneficiaries either as cash or as specific assets, unless the trust document requires a particular form.
• Execute instruments — Sign deeds, assignments, trust certifications, brokerage transfer forms, and other instruments to accomplish trust purposes.

Express powers in well-drafted trust documents

Many trust documents go beyond the UTC defaults and include express powers that expand your authority. Read your trust's "Trustee Powers" article carefully (often Article V, VI, or VII). Common expansions include:

• Power to retain concentrated positions. UPIA § 3 creates a default duty to diversify. Trust documents often include a "retain assets" clause that suspends this duty for specific holdings or for a period of time — allowing you to hold a position the settlor wanted retained without being personally liable for failure to diversify.
• Absolute discretion. Discretionary distribution trusts often grant "absolute and uncontrolled discretion," meaning a court can overturn your distribution decision only if you acted in bad faith — a much higher bar than ordinary trustee discretion.
• Power to operate a business. Standard UTC § 816 allows continuing a business; trust documents often expand this to include making contributions, incurring obligations, and taking risks appropriate for business operations.
• Investment in nontraditional assets. Some trusts expressly permit investment in hedge funds, private equity, partnership interests, life insurance, real estate, and other assets that might not qualify as prudent under a strict UPIA reading.
• Partition, combine, or terminate sub-trusts. For trusts that split into multiple shares (AB trusts, multiple-beneficiary trusts), the document may give you authority to combine, partition, or terminate sub-trusts without court action.
• Trustee self-dealing exceptions. Some trust documents expressly authorize certain transactions that would otherwise require court approval — for example, allowing the trustee to purchase real estate from the trust at fair market value, or to lend money to the trustee personally on market terms.

Acts typically requiring court approval or beneficiary consent

Even with broad powers, certain categories of trustee action require additional authorization:

Self-dealing (UTC § 802)

Transactions in which you, as trustee, have a personal interest are presumptively voidable — meaning a beneficiary can unwind them even if the price was fair. The prohibition covers: purchasing trust assets yourself, selling your own property to the trust, hiring your own business to provide services to the trust, and lending money to the trust from your personal funds.²

Self-dealing can be authorized by: (1) an express provision in the trust document (many trusts authorize trustee-to-trust sales at appraised value); (2) informed consent of all affected beneficiaries after full disclosure; or (3) court approval on petition. If you face a transaction that creates a personal conflict, get explicit authorization before proceeding — not afterward.

Trust modification

Changing the terms of the trust document itself — distribution standards, trustee succession, investment restrictions — requires one of the four modification paths: beneficiary consent (UTC § 411), trust decanting (state decanting statute), nonjudicial settlement agreement (UTC § 111), or court petition (UTC §§ 412, 415, 416). You cannot unilaterally change trust terms even if you believe a change would benefit everyone. See the irrevocable trust modification guide for detail.

Petitioning for instructions

When your trust document is ambiguous about what you may do, or when you face competing beneficiary demands you cannot satisfy simultaneously, you may petition the probate court for instructions. This is not a sign of failure — it is standard trustee practice in genuinely ambiguous situations. The petition establishes a court record that protects you from later claims that you made the wrong call.

Formal court accounting

Voluntary accountings to beneficiaries are generally within your discretion. But if a beneficiary objects and seeks a formal court accounting, you cannot avoid the process — the court will require a formal judicial accounting that meets stricter evidentiary standards than your annual statement to beneficiaries.

Delegating investment management (UPIA § 9)

One of the most practically important powers in the UTC and UPIA framework is the ability to delegate investment management to a professional agent — a financial advisor or investment manager. UPIA § 9 governs this delegation.³

The three requirements for a valid UPIA § 9 delegation:

1. Prudent selection. You must exercise reasonable care in selecting the agent — evaluating their qualifications, regulatory status, fee structure, and approach. Selecting a commission-based broker creates conflicts that can generate a fiduciary complaint; selecting a fee-only registered investment advisor eliminates the product-selling conflict entirely.
2. Written agreement defining scope. The delegation must be documented with terms that define the agent's scope, investment objectives, constraints (e.g., no concentrated single-stock positions above X%), and compensation. This is typically the Investment Policy Statement that a fee-only advisor helps you prepare.
3. Periodic monitoring. You must periodically review the agent's performance and compliance with the delegation terms. You cannot hand over the portfolio and ignore it — you retain oversight responsibility even when you have properly delegated day-to-day management.

What you cannot delegate: core trustee functions. You may delegate investment management but not the authority to make distribution decisions, sign beneficiary accountings, determine whether a distribution request meets the HEMS standard, or make tax elections. These are fiduciary judgments that are uniquely yours as trustee.

How to read your trust document for powers

Practical steps when you first receive the trust document:

1. Find the trustee powers article. Look in the table of contents for "Trustee Powers," "Powers of Trustee," or similar. It is usually Articles V through VII in most standard forms.
2. Look for a "retain assets" or "no duty to diversify" provision. If it exists, it may suspend the UPIA diversification duty for specific assets — important if the trust holds concentrated stock or a family business.
3. Identify the distribution standard. "Absolute discretion" vs. "HEMS" (health, education, maintenance, support) vs. a specific defined standard changes how much latitude you have and how courts will review distribution decisions.
4. Note any limitations on investment authority. Some trust documents restrict investment to certain asset classes, prohibit borrowing, or require specific advisor engagement. These override UTC § 816 defaults.
5. Check co-trustee voting rules. If there are co-trustees, confirm whether powers require unanimous agreement, majority vote, or whether individual trustees may act alone for routine matters.
6. Look for self-dealing exceptions. If any transaction you are contemplating involves a personal interest, find out whether the trust document expressly authorizes it — or whether you need to seek approval.

Documenting your exercise of powers

Having the authority to take an action is only half the protection. The other half is documentation that shows you exercised the authority with a reasonable process. For every significant decision — selling an asset, making a distribution, entering a lease, retaining a concentrated position — maintain a written record of:

• What power you relied on (trust document section or UTC § 816 subsection)
• What information you considered
• What alternatives you evaluated
• Why you chose the course you did
• Any professional advice you received

This paper trail is your defense in a surcharge action. Trustees who lose surcharge claims rarely lose because the action itself was wrong — they lose because they cannot demonstrate a documented process. See the trustee liability guide for detail on what that process looks like in practice.

Sources

1. Uniform Law Commission — Uniform Trust Code. UTC § 816 (Specific Powers of Trustee): enumerated statutory powers available to trustees absent contrary trust terms, including powers to sell, lease, borrow, invest, operate business, hire agents, and distribute. UTC § 802 (Duty of Loyalty and Self-Dealing): prohibition on conflicted transactions, exceptions requiring beneficiary consent or court approval. UTC § 815 (General Powers): trustee may exercise any power appropriate to achieve trust purposes and the enumerated powers. 35+ states have enacted UTC or substantial equivalent.
2. Uniform Law Commission — UTC § 802 (Duty of Loyalty). Self-dealing prohibition: transactions creating conflict of interest are voidable by beneficiary even if fair value was paid. Exceptions: trust document authorization, informed beneficiary consent, court approval. Burden on trustee to prove fairness once conflict is shown.
3. Uniform Law Commission — Uniform Prudent Investor Act § 9 (Delegation). Trustee delegation of investment and management functions: three conditions (prudent selection of agent, written terms defining scope and conditions, periodic monitoring of agent's performance and compliance). Trustee who satisfies § 9 conditions is not liable for agent's decisions. Agent owes duty of care to trust directly. Non-delegable: distribution decisions, core fiduciary judgments.
4. Nolo — Successor Trustee Duties and Powers. Overview of trustee powers under standard trust agreements and state law, including property management, investment authority, tax elections, and when professional advisors are appropriate. General reference for trust administration practice.

Trustee powers described here follow the Uniform Trust Code (2000, as amended) and the Uniform Prudent Investor Act (1994), which have been adopted in substantially similar form by 35+ states. Individual state enactments vary — consult your estate attorney for jurisdiction-specific guidance. Powers listed are default rules; your trust document may expand or restrict any of them. Values and statutory references verified as of May 2026.