Tennessee § 35-15-1202 - Trust advisors and trust protectors as fiduciaries.

§ 35-15-1202. Trust advisors and trust protectors as fiduciaries.

A trust advisor or trust protector, other than a beneficiary, is a fiduciary with respect to each power granted to such trust advisor or trust protector. In exercising any power or refraining from exercising any power, a trust advisor or trust protector shall act in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries. A trust advisor or trust protector is an excluded fiduciary with respect to each power granted or reserved exclusively to any one or more other trustees, trust advisors, or trust protectors. Acts 2013, ch. 390, § 43. Compiler's Notes. Acts 2013, ch. 390, § 55 provided that: (b) Except as otherwise provided in the act, on July 1, 2013: The act applies to all trusts created before, on, or after July 1, 2013; The act applies to all judicial proceedings concerning trusts commenced on or after July 1, 2013; The act applies to judicial proceedings concerning trusts commenced before July 1, 2013, unless the court finds that application of a particular provision of the act would substantially interfere with the effective conduct of the judicial proceedings or prejudice the rights of the parties, in which case the particular provision of the act does not apply and the superseded law applies; Any rule of construction or presumption provided in the act applies to trust instruments executed before July 1, 2013, unless there is a clear and express indication of a contrary intent in the terms of the trust; and An act done before July 1, 2013, is not affected by the act. Section Comment. Unless provided otherwise hereinafter, any reference to “section,” “subsection” or “subdivision” means all, or such portion of, T.C.A. § 35-15-1202 . The Uniform Trust Code has no similar provision to this section. The effects of the provisions of this section may result in significant divergence from the Uniform Trust Code and the restatements. To the extent this section is in conflict with the Uniform Trust Code, any restatement or any other foreign law, such foreign law is not precedential or con-trolling and is rejected by the Tennessee Uniform Trust Code. Subsection (a) contains two default rules: The first is that any trust advisor or trust protector other than a beneficiary is a fiduciary with respect to each power held by such trust advisor or trust protector. The second is that in in exercising a power, or refraining therefrom, a trust advisor or trust protector must not only act in accordance with the terms and purposes of the trust and the interests of the beneficiaries (as such are defined in the terms of the trust per T.C.A. § 35-15-105(b)(3) ), such trust advisor or trust protector must also act in good faith Such default rules are likely to be the appropriate ones in most circumstances (as are the similar default rules regarding good faith found in T.C.A. §§ 35-15-801 , 35-15-808(d) and 35-15-1002 ). Nevertheless, the default rules of subsection (a) relating to the requirement that a trust advisor or trust protector must act in a fiduciary capacity and the duty of a trust advisor or trust protector to act in good faith can be overridden by the terms of a trust, an agreement of the qualified beneficiaries or a court order. Moreover relative to a trust in general as well as the powers and duties of a trust advisor or trust protector, the default rules in T.C.A. §§ 35-15-801 , 35-15-808(d) and 35-15-1002 ) can be overridden by the terms of a trust. The reasons the above specified default rules can be overridden is that they are not required by the mandatory provisions of T.C.A. § 35-15-105(b) . Therefore, a trust advisor or trust protector can serve as such in either a fiduciary or non-fiduciary capacity and may or may be subject to a duty of good faith. On a related note, it is the opinion of the drafters of the Tennessee Uniform Trust Code that, while a trust advisor or trust protector cannot be exculpated form breach of trust committed with reckless indifference to the purposes of the trust or the interests of the beneficiaries (as such interests of the beneficiaries are defined in the terms of the trust), so long as such exculpation provision was not inserted in a manner that violates T.C.A. § 35-15-1008 (a)(2) or (b), a trust advisor or trust protector can be exculpated from having to act in good faith. See the section comment to T.C.A. § 35-15-1008 for a discussion of why this is so. Subsection (b) describes the extent to which a trust advisor or trust protector will be an excluded fiduciary. It follows the definition of “excluded fiduciary” in T.C.A. § 35-15-103 and the concept that those persons who do not have a power or duty over a trust should not be liable for the actions of the other persons who do have such power or duty. If a right is acquired, extinguished, or barred upon the expiration of a prescribed period that has commenced to run under any other statute before July 1, 2013, that statute continues to apply to the right even if it has been repealed or superseded.