Utilizing Delaware’s Excluded Co-Trustee Statute, Section 3313A of Title 12 of the Delaware Code
Enacted in 2017, Section 3313A of Title 12 of the Delaware Code (Delaware’s “Excluded Co-Trustee Statute”) addresses the duties and liabilities of co-trustees wherein the trust instrument confers on a co-trustee or co-trustees the exclusive power to take, or direct another trustee to take, specified actions with respect to the trust. In this article, the trustee who is granted an exclusive power over a trust is known as the “non- excluded trustee” with respect to that power, and each other trustee is known as an “excluded trustee”. The Excluded Co-Trustee Statute codifies the concept of reducing or completely eliminating the liability of a co-trustee for matters entirely outside of the scope of its authority pursuant to the provisions of a trust instrument. This article examines the terms of the Excluded Co-Trustee Statute, some of its practical uses, and some of the issues that practitioners should be aware of when trustee powers are bifurcated among co-trustees.
The Excluded Co-Trustee Statute is modeled after Section 3313 of Title 12 (Delaware’s “Directed Trust Statute”), but goes further to address the complete bifurcation of the trustees’ powers and responsibilities among co-trustees. In a traditional directed trust, the trustee retains its powers, but the trust instrument vests the discretion for decisions regarding one or more of the trustee’s powers in other individuals or entities referred to as “advisers”under the Directed Trust Statute. The discretion vested in an adviser can relate to a variety of different types of decisions, including investment decisions, distribution decisions, and administrative decisions related to the trust, and the trustee is required to carry out such decisions upon the direction of the appropriate adviser…
