How is the authority of trustees in a business trust determined?

The authority of trustees in a business trust is determined by the provisions of the instrument of trust. This document outlines the rules, responsibilities, and powers that govern the trustees’ actions and decisions. Essentially, the instrument of trust serves as the foundational guideline for how the trust operates, including the specific powers granted to the trustees.

Trustees are given the ability to act on behalf of the trust as specified within that document, which may include managing trust assets, making investments, and distributing income to beneficiaries, among other duties. Since the provisions define their limits and scope of authority, it is crucial for all parties involved to refer to this document for guidance on trustee actions.

While state law and other factors like the consensus of the board or beneficiary votes can play a role in broader governance or certain regulatory matters, it is the trust instrument that primarily articulates the specific authority of the trustees. Therefore, understanding the trust's foundational document is essential for grasping how trustees should operate within a business trust structure.