Can You Waive Fiduciary Duty?
There is a recent case that came down within the last couple of years. It was a case dealing with a trust and a trustee, and how that trustee handled a trust. Frankly, the trust was not very artfully drafted. In essence, it gave the trustee very broad authority. The trust attempted to waive any obligation on the part of the trustee to act as a fiduciary.
My recollection is that the trial court agreed that that is in fact what the trust said, and that the trustee was not liable for breaching its fiduciary duty.
In a very important decision, the Kansas Supreme Court disagreed. Basically it said that a trustee has a fiduciary duty to the beneficiaries, irrespective of what the trust says. It is a far reaching opinion.
There has been a spinoff of many other litigations based on that case. Frankly, I would suspect that that position will apply to agent under powers of attorneys: they owe a fiduciary duty irrespective of what the power of attorney says.
We’re always careful in counseling trustees and power of attorney agents on their duties. They cannot be self-serving. I know in our powers of attorneys we include provisions that they cannot change the testamentary intent for the person granting the power of attorney.
I know it puts those dealing with powers of attorneys and trustees in an awkward position. It is also a warning to trustees and power of attorney agents regarding their obligations.