A trusteeship’s power and endurance derives from its status as a moral relationship. It’s never been merely defined by law. Indeed, trusts had to surmount the common law even to exist.1 They emerged from the equity tradition in the English Chancery and trace back to emanations from the Chancellor’s conscience.

The challenge today is that, in its own way, the law has had its revenge.2 There have never been so many trusts and so many assets held in trust. Yet the “personhood” of the trustee seems to be shrinking. Corporate mergers, cost reductions and fear of litigation have led, for institutional trustees, to fewer staff members administering larger caseloads under centralized policies and procedures. At the same time, trustee-like roles, such as directors, members, trust protectors and trust advisors have emerged, which, in combination with diverse state laws allowing delegation of responsibilities, have obscured the nature of trusteeship and left many people confused as to what, if anything, a trustee does.

What haven’t changed are perennial, non-legal concerns about trusts. Trusts have long been criticized as stultifying to capital and to human beings. Perhaps the primary concern is that trusts are infantilizing, creating trust babies who live irresponsible, purposeless and stunted lives. Many people also criticize trusts as paternalistic: controlling rather than liberating, opaque rather than transparent, often unchangeable and unchanging. Both grantors and beneficiaries often feel frustrated in the face of the questions: “Whose money is it?” and “Why can’t I spend it?” Finally, personal trusts have an air of unfairness about them. They take the dubious principle of inheritance (“Because of my birth, you work and I’ll eat”) and extend it potentially ad infinitum. Unfortunately, when grantors, beneficiaries and others raise these concerns, the profession tends to meet them with studied silence.

We believe that there’s no ultimate legal solution to these challenges. Rather, we see the solution in a renewed understanding of the moral reality of trusteeship that subsists and has always subsisted beneath its legal expressions.3 To begin this renewal, we’ll first turn to the authoritative legal opinions regarding trusts. These opinions identify the core of trusteeship not in specific rules, but in principles or character, which we call “the fiduciary character.” We’ll then share insights on the complexity of forming fiduciary character. Finally, we’ll offer suggestions on how trustees, potential trustees and educators of and counselors to trustees can develop fiduciary character through the specific exercise of moral imagination.

In our work, we’ve met many thoughtful trustees, well-meaning grantors and decent beneficiaries who’ve felt deeply dissatisfied with the impact of trusts on their lives. We’ve also met many conscientious practitioners who despair at the consequences of their work. Our goal is not only to increase understanding, but also to offer encouragement to the practitioners who design trusts and the families who use them. These goals are necessarily connected, for true courage depends on knowledge.4


“People with Principles”

In the book, Loring and Rounds: A Trustee’s Handbook by Charles E. Rounds, Jr. and Charles E. Rounds, III, we read, “The concepts of the law of trusts are simple and easy to understand. They are based not on technique, but on broad human principles of conduct, on a sense of justice and fair play.”5 The authors go on to say: “A principles-based regime, more so than a rules-based one, can only work if administered by people with principles.”6 Further, “A trusteeship brings with it ‘no small degree of trouble and anxiety,’ at least for the trustee who is conscientious.”7

These observations sum up the central challenge facing trustees today: How does one develop the moral character to bring “personhood” to the office of trustee? 

“Personhood” has been a mainstay of English law since medieval times. Litigants who believed a decision of a court of law was unfair were permitted to petition directly to the king to seek a just result. Over time, the king delegated this duty to the Lord Chancellor, known as “the Keeper of the King’s Conscience.”8 During the 14th century, the English Court of Chancery emerged. The court had authority to order a substantive equitable remedy when enforcement of the law would lead to an injustice. The set of legal principles to mitigate harsh decisions by the courts of law became known as “equity.”

As is well known, but perhaps not well enough appreciated, trusts are rooted in equity. Under English common law, the recipient of legal title to property enjoyed all the rights of ownership notwithstanding an intent for the recipient to hold the property for the benefit of a third person. To avoid the unjust enrichment of the recipient, the Court of Chancery enforced an equitable “trust” relationship.9

The trust relationship has been expressed not just in rules governing the behavior of the recipient of property for another (the trustee), but also in expectations for the character of that person as manifest by conduct. This is a crucial distinction: rules versus persons. As a result, attention to the person of the trustee and the quality of her discretion appears again and again in decisions construing the trustee’s duties.

Preeminent examples include the Massachusetts Supreme Judicial Court’s first statement of “the prudent man rule” in 1830, which—even in the limited arena of investing—points to a type of person, not a set of rules:


All that can be required of a trustee to invest, is, that he shall conduct himself faithfully and exercise a sound discretion. He is to observe how men of prudence, discretion and intelligence manage their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital to be invested.10


A century later, in speaking of the trustee’s duty of loyalty, Justice Benjamin N. Cardozo wrote:


A trustee is held to something stricter than the morals of the marketplace. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior … the level of conduct for fiduciaries [has] been kept at a level higher than that trodden by the crowd.11


Today, the duty of prudence extends beyond the investment arena to include broader trust administration. And personhood is at the core, as the Uniform Trust Code12 acknowledges:


A trustee shall administer the trust as a prudent person would by considering the purposes, terms, distribution requirements and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill and caution.13


Developing the Fiduciary Character

From these promptings of the law, we conclude that what’s crucial to good trusteeship isn’t primarily a set of rules, but rather the development of a type of character, which we call “the fiduciary character.”

To turn for the moment to a fundamental teacher on morals in the West, Aristotle defines character (ēthos) as a type of habit (ethos) that’s been shaped by choice into an active condition (hexis) of choosing well.14 In other words, character is a settled way of holding yourself towards the world and your own passions. That’s why it takes time to form, doesn’t change overnight and is largely predictable. That’s also why character is hard to explain, yet we know it as soon as we see it.

For our purposes, a few observations about this character are in order. As the equity tradition makes clear, it’s a specifically fiduciary character. As David R. Smith, professor emeritus of religious studies at Indiana University in Bloomington, Ind., argues in the context of charitable trusts, the moral core of trusteeship connects three parties: grantor, trustee and beneficiary. This core thus distinguishes the trustee’s character from that of other trusted parties:


… trusteeship is not a simple two-party fiduciary relationship between two individuals, professional and client, man and woman. In its tripartite formulation, it more closely resembles the relationship between parents whose love for each other leads to a bond with their children, or a religious ethic in which duties to other persons are dependent on a prior relationship with God. The trustee’s actions for the beneficiary, like those of a spouse or a disciple, are always constrained in some way by a prior relationship or person—by the will of the founder or by the purpose for which the organization was created.15  


Thus, fiduciary character begins with attention, a sort of Janus-like attention, at once back to the grantor and forward to the beneficiary. The most common expression of this attention is “discretion,” which we would link to prudence through the exercise of the activity of deliberation or discernment.16

But the trustee isn’t pure minded. As Aristotle indicates, character shapes the passions. The equitable tradition (not to mention modern litigation) suggests that the first passion this character shapes is acquisitiveness. The trustee must develop a settled habit of choosing well with regard to taking and not taking for herself. Further, the tradition points to the importance of the passion of care. The trustee has to develop a settled habit of caring well, both for the grantor (or her wishes) and for the beneficiary. Only by developing this active condition can a trustee hope to avoid the twofold pitfall of paternalism and infantilization.17 

Smith also indicates in the same passage that trusteeship finds its place within a certain view of the world that we may call opinion or belief, namely, the view that all people are stewards of their present goods, handed to them by others and to be handed down in turn to future generations.18 This understanding of character finds support in Aristotle, who surmises that people who choose well have a certain vision of what’s good. This vision may come first through custom, opinion or common beliefs. But true sure-footedness in choosing well comes only when we transform this vision or belief into settled habit.19


The Moral Imagination

Given that trusteeship is work, our question isn’t simply theoretical—and we have only begun to explore that path—but also practical: How can one develop this fiduciary character, if one is a trustee, prospective trustee or counselor to trustees?

Developing character involves shaping the vision of the good through attention to particular examples. We call this work exercising “moral imagination.” One of the most powerful ways to exercise moral imagination is through reading, reflecting on and discussing relevant and penetrating works of literature and history. For example, consider Allan Gurganus’ 1990 short story “Blessed Assurance,” in which a 59-year-old white lawyer, who serves as a personal trustee and who has also established trusts for his children, reflects on his own moral development since the time he was 19 years old and sold funeral insurance to low-income black individuals. He terminated insurance contracts for nine elderly people who fell behind on their payments. His boss taught him “not to feel heart,” or he would be lost as a businessman. It was simply a matter of the rules. Other examples include selections from Henry James’ The Spoils of Poynton, John Marquand’s The Late George Apley, various tales by Louis Auchincloss, and, more recently, George Howe Colt’s The Big House and Edmund de Waal’s The Hare with Amber Eyes, not to mention televised dramas such as “Downton Abbey” or “Upstairs Downstairs.” Well-written biographies also could provide a rich vein to mine. Sociologist James Hughes invites trustees to exercise their imagination in a similar fashion by asking them to consider themselves as “regents” or “mentors,” using analogies from Shakespeare and Homer to prompt their thinking.20

Reading and reflecting on such stories may seem a flimsy response to the serious issues surrounding trusteeship. But experience in other fields indicates that it can make a significant difference, especially in the lives of practitioners.21 To explore this possibility, we offer the following suggestions:


1. Practitioners, trustees and publishers should work together to expand and deepen the list started above to develop a body of readings in this field.22

2. Another resource for exercising the trustee’s moral imagination comes from considering true stories collected from trustees, beneficiaries and grantors.23 

3. Smith argues vigorously that charitable trustees should, above all, become “communities of interpretation,”24 tasked with thinking and talking through the various obligations to founders, employees and service recipients. A similar activity for personal trustees could be immensely helpful in shaping and reinforcing fiduciary character. The often-isolated nature of personal trusteeship poses a significant challenge. However, this could be a place where the amalgamation of trust companies or professional services firms, not to mention the growth of peer-to-peer membership organizations, could provide space for the shared exercise of moral imagination.25


We hope that these brief thoughts help further a conversation among those who share our interest in renewing the understanding and development of fiduciary character and, ultimately, help strengthen this unique moral and legal relationship.                                 



1. See generally Charles E. Rounds, Jr. and Charles E. Rounds, III, Loring and Rounds: A Trustee’s Handbook (2013 edition) (Wolters Kluwer 2013) (Loring and Rounds), Chapter 1, for a discussion of the origin of trusteeship under English law.

2. For the separate but parallel marginalization of the fiduciary principle in American law school education, see ibid, Section 8.25.

3. We take as a model for this work the efforts of David R. Smith concerning the trusteeship of charitable organizations. See Entrusted: The Moral Responsibilities of Trusteeship (Bloomington, Ind: Indiana University Press 1995). A similar, broader effort is represented by the project on the “Ethics of Everyday Life,” sponsored by the University of Notre Dame, and expressed, for example, in Gilbert Meilander’s Working: Its Meaning and its Limits (North Bend, Ind: University of Notre Dame Press 2000). As this article attests, we share Smith’s conclusion, mutatis mutandis for personal as opposed to charitable trusts, “that capacities for moral imagination and reasoning are essential in a trustee …”

4. By pointing to the importance of courage and not only resilience, we highlight the centrality of character and not only psychology to the work of serving as a trustee. For the interplay of resilience and courage in the context of family wealth and trusts, see James Hughes, Susan Massenzio and Keith Whitaker, The Cycle of the Gift: Family Wealth & Wisdom (New York, NY: Bloomberg 2013), especially Chapters 4 and 7.

5. Loring and Rounds, supra note 1 at p. 38, quoting A.W. Scott, W.F. Fratcher and M.L. Ascher, Scott and Ascher on Trusts (5th ed. 2006), Epilogue.

6. Ibid, at p. 38.

7. Ibid, citing Knight v. Earl of Plymouth (1747), Dick. 120.

8. Ibid, at p. 3.

9. Ibid. at p. 2.

10. Harvard College v. Amory, 9 Pick. (26 Mass.) 446, 461 (Mass. 1830). 

11. Meinhard v. Salmon, 164 N.E. 545 (N.Y. 1928).

12. The intent of the Uniform Trust Code (UTC) is to: 

… provide States with precise, comprehensive and easily accessible guidance on trust law questions. On issues on which States diverge or on which the law is unclear or unknown, the Code will for the first time provide a uniform rule. (UTC, Prefatory Note) 

Presumably, the hope is that uniform codification will reduce somewhat the need for attending to such concepts as “the prudent man” or “personhood,” at least in some areas of trust law. And yet, one could argue that these attempts at codification have resulted in less, not more, uniformity across jurisdictions. The fundamental opinions in this area of the law recognize what legislators often forget: trustees have readier access to an understanding of character—by visiting themselves—than to the interpretation of statutes, by considering their law library.

13. UTC, Section 804 Prudent Administration.

14. See Aristotle’s Nicomachean Ethics, Book II, Chapters 1 and 5. This summary of Aristotle’s treatment of ethics is necessarily brief. For a helpful translation with commentary, see Joe Sachs (translator), Nicomachean Ethics (Newburyport, Mass: Focus Press 2002).

15. Smith, supra note 3.

16. For a discussion illustrating how prudence or discernment differs from diversification, for example, see James E. Hughes, Family: The Compact Among Generations (New York: NY, Bloomberg 2007), at pp. 174-177.

17. For more on the virtue with respect to care, see Paul Schervish and Keith Whitaker, Wealth and the Will of God: Discerning the Use of Riches in the Service of Ultimate Purpose (Bloomington, Ind. Indiana University Press 2010), at  pp. 6-7.

18. While culturally expressed, the fiduciary belief isn’t necessarily a cultural artifact. For example, the Romans had trust relationships in the form of “uses.” See Fustel de Coulanges, The Ancient City: a Study on the Religion, Laws, and Institutions of Greece and Rome (Baltimore: The Johns Hopkins University Press 1980) and Cicero, On Old Age. Under Islamic law, a trust or waq’f can be established for charitable and personal beneficiaries; the ownership becomes God’s. The concept of stewarding the spirit of the gift appears across cultures, as evidenced in Marcel Mauss’ study, The Gift: the Form and Reason for Exchange in Archaic Societies, W. D. Halls (translator) (New York, NY: Norton 1990). See also Hughes, Massenzio and Whitaker, supra note 4, Chapter 2.

19. See Nicomachean Ethics, supra note 14, Book III, Chapter 5 and Book VI, Chapters 12-13.

20. James E. Hughes, Family Wealth: Keeping it in the Family (New York, NY: Bloomberg 2004), at pp. 181-194.

21. See the work of the Project for Civic Reflection within a variety of disciplines, including medicine, education and philanthropy, described at www.civicreflection.org.

22. For a model in other, related fields, see Adam Davis and Elizabeth Lynn, eds., The Civically Engaged Reader (Chicago: The Great Books Foundation 2006). Two other examples for such a collection—which may also include suitable narratives—are Amy Kass’ The Perfect Gift: the Philanthropic Imagination in Poetry and Prose (Bloomington, Ind: Indiana University Press 2002) and Giving Well, Doing Good: Readings for Thoughtful Philanthropists (Bloomington, Ind: Indiana University Press 2008).

23. A marvelous collection of such stories appear in Hartley Goldstone and Kathy Wiseman, Trustworthy: New Angles on Trusts from Beneficiaries and Trustees (Denver: Trustscape LLC 2012), www.navigatingthetrustscape.com.

24. Smith, supra note 3.

25. Consider too the recommendations of Barry Schwartz and Kenneth Sharpe to practitioners who seek to exercise sound judgment within institutions that focus more on rules than on character. See Schwartz and Sharpe, Practical Wisdom: The Right Way to do the Right Thing (New York: Riverhead Books 2010), particularly Chapters 7, 11 and 12.