Which of the following describes a trustee's duty of care?

A trustee's duty of care encompasses the requirement to act with care, skill, and diligence. This principle is fundamental to the role of a trustee, ensuring that they manage the trust's assets responsibly and competently. It means that the trustee must apply a degree of care that a reasonably prudent person would use in similar circumstances, reflecting both the legal and fiduciary responsibilities they hold.

A trustee is expected to be knowledgeable about the nature of the trust assets and to consult experts when necessary. This duty of care also protects beneficiaries by requiring trustees to avoid negligent actions that could lead to financial losses. By adhering to this standard, trustees help ensure that the trust is administered effectively, which ultimately serves the best interests of the beneficiaries.

While the other options represent important responsibilities of a trustee, they do not specifically characterize the overarching duty of care as comprehensively as the requirement to act with care, skill, and diligence. Balancing the interests of beneficiaries, segregating trust property, and keeping accurate records are all components that contribute to the overall management of a trust but are secondary to the essential responsibility of exercising proper care and diligence in carrying out fiduciary duties.