Study On Trustee's Prudent Duty

Trust originated in Britain, flourished in the United States. Due to its unique system superiority, some civil law countries have also introduced it. People increasingly prefer to it, particularly in the financial field. In China, veritable trust is introduced not long time. Because it is exotic, trust appeared to acclimatized phenomenon in the localization process. One of the most prominent issues is that the trust law in China only made abstractive provisions on the trustee's prudent duty. Those provisions are lack of objective standard. The problem causes that duties are useless. Along with the function of trust changes from negative management to active management, the role of trustee also changes,the trustee's power also expands. Prudent duty is a kind of restraint mechanism of duty, by which beneficiaries supervise trustees. To beneficiaries, prudent duty is very important. But trust law can't meet the needs of beneficiaries because that prudent duty is so simple. Therefore, it will be unavoidable that prudent duty should be further standardization and clarification. Due to the defects of prudent duty, this paper expect to help to complete the relevant rules in China, through studying other countries' trust law which is more advanced. The text is divided into five parts:Part one is the overview of trustee's prudent duty. From four aspects to study trustee's prudent duty, the connotations, nature, legal basis and the difference between trustee's prudent duty and director's duty of care. Trustee's prudent duty include three elements: care, skill and caution. The nature of trustee's prudent duty is why trustees bear prudent duty. The legal basis is fiduciary duties of common law and good faith of civil law. Comparing trustee's prudent duty with director's duty of care, we can't directly use Business Judgment Rule to judge trustee's prudent duty.Part two is the comparative study of trustee's prudent duty. The chapter briefly describes the development and evolution of the prudent duty of trustee in the two legal system. Rules of trustee's prudent duty in common law are more specific than civil law countries'. It come to conclusion that the prudent duty of trustee in USA can provide reference to us.Part three is the analysis of the legal attribution of the prudent duty.The legal attribution the prudent duty is not a mere optional flange or jus cogens. It is related to trustee's responsibility. It will be invalid that the client remit trustee's grievous faulty.Part four is the present situation of the trustee's prudent duty. By reviewing the defects that exist in China's Trust Law on the prudent duty of trustee, there are some problems: firstly, the standard of prudent is not clear; secondly, accountability mechanism is unreasonable when the trustee violate the prudent duty.Part five is some suggestions to improving the prudent duty of trustee in China. The part come up with suggestions from three aspects: establishing standard, establishing testing methods and improving accountability assigning mechanism.