🥺
Trusts • Trustee Powers & Duties
TRUSTS#039
Legal Definition
The duty to earmark & segregate requires the trustee to label trust property as trust property and not commingle it with their own personal funds
Plain English Explanation
In the 1500's, it was common to cut or mark the ear of sheep and cattle to help show who owned which individual animal to help sort them out when they became comingled while grazing on common pastures. Similarly, there is a duty to "earmark" property that belongs to the trust to ensure it is properly identified and separated from any other assets owned or managed by the trustee that are not related to the trust.
Hypothetical
Hypo 1: Bob is the trustee of Sam's trust. Bob uses the Robinhood stock trading app on his phone to buy and sell stocks. He owns several hundred shares of GameStop and, realizing the price is about to surge, decides to buy an addition 300 shares for Sam's trust using his account. Result: Bob has breached his duty to earmark because now his shares in GameStop are comingled with Sam's and there are no identifying ways to determine which specific shares belong to Sam and which belong to Bob. Bob should have created a separate investment account specifically for investments related to Sam's trust.
Visual Aids
Related Concepts
In assessing a duty to invest what are state lists?
What are the trustee's duties?
What are the trustee's powers?
What is the duty of care?
What is the duty of loyalty?
What is the duty to account?
What is the duty to act impartially?
What is the duty to diversify?
What is the duty to invest?
What is the duty to perform personally?
What is the Uniform Prudent Investor Act?
