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Duty of Care

Duty of Care is a legal concept prevalent in various forms of business, including the Delaware Statutory Trust industry. It refers to the obligation that a trustee or manager has to act with a certain level of attention, caution, and prudence while making decisions that could potentially impact the trust and its beneficiaries.

In the Delaware Statutory Trust (DST) industry, the Duty of Care can typically be outlined in the trust agreement, which can be more or less stringent than the default rules laid out by the Delaware Statutory Trust Act. It generally means that the trustee or the manager is required to carry out his or her responsibilities in good faith, in a manner that he or she reasonably believes to be in the best interest of the trust and with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity would use in the conduct of an enterprise of a like character and with like aims.

Failure to uphold this Duty of Care can lead to legal ramifications if the negligence or malfeasance results in harm to the trust or its beneficiaries. This concept is integral to the governance and operation of Delaware Statutory Trusts, fostering trust and protecting beneficiaries’ interests.