If you need to understand the concept of a “trustee” or who serves in that role, you’re not alone. It’s a common role in many legal settings a and the definition can vary from one context to another. Here, the experts shed light on what trustees do and why they are important.
What Is a Trustee? A Definition
In simplest terms, a trustee is someone appointed to manage assets or property for the benefit of other people—the “beneficiaries” of the trust. As the trustee, you are responsible for ensuring that the assets you oversee are used to provide the beneficiaries with their expected benefit or return, whether it’s a financial return or other benefit.
Types of Trustees
There are multiple types of trustees. For example, in a will or estate plan, the trustee is usually a person, like a family member, named in the document who is tasked with carrying out the instructions set forth in the will. In an investment trust, there is usually a trustee corporation hired to oversee investments and manage the trust’s assets.
Examples of Trustees
Trustees come in all shapes and sizes. Here are just a few:
- Real estate trusts: Experts suggest a trustee be a neutral party with knowledge of real estate law. A real estate trust can help protect the property, mitigate taxes, and distribute proceeds to the beneficiaries.
- Corporate trusts: Corporate trustees are typically financial institutions that are appointed to manage trusts with large amounts of reinvestment income and distributions.
- Executors: When an individual passes away, the executor (or trustee or personal representative) is legally responsible for carrying out the instructions in the deceased’s will and distributing the estate’s assets as expected.
- Self-settled trusts: With a self-settled trust, you can put yourself in the role of trustee block creditors from accessing the trust.
The Responsibilities of Being a Trustee
There are many responsibilities that come with being a trustee. Elementary duties like identifying and collecting trust assets, accounting and managing investments, and ensuring the assets are properly managed. In addition, trustees must act in accordance with the terms and conditions of the trust and with the interest of the beneficiaries constantly in mind. Fiduciary duties like acting in utmost good faith and loyalty, avoiding conflicts of interest, and making diligent decisions are paramount; and, if required, trustees are expected to defend the interests of the trust in court.
Conclusion
We hope this helps explain what a trustee is and the multiple roles they can play in various legal settings. The person serving as the trustee must have the ability to make wise decisions and manage the trust with absolute integrity. If you are acting as a trustee, be sure to have a clear understanding of the duties you are required to undertake and obtain counsel when needed.