What Is a Trustee & What Do They Actually Do?
Three Parties to a Trust
There are three parties to a trust: (1) the settlor (sometimes called the donor or grantor); (2) the trustee; and (3) the beneficiary. Let’s talk about the “middle man” of this arrangement – the trustee.
Definition of Trustee
The trustee is the person who receives the property and accepts the obligation to hold the property for the benefit of the beneficiary. There can be one, two, or many trustees.
General Duties of Trustees
A person who accepts the role of trustee has numerous responsibilities. In particular, trustee owes several duties, which may be fairly summarized as follows:
- The duty to be prudent, especially with respect to investment of trust assets.
- The duty to carry out the terms of the trust.
- The duty to be loyal to the trust and administer the trust solely for the benefit of the beneficiaries.
- The duty to give personal attention to the affairs of the trust.
- The duty to provide regular accounting to the beneficiaries.
Court Can Choose Trustees
If the trustee chosen by the settlor is unwilling or unable to serve, and if the settlor has not chosen a successor trustee, a court will appoint a trustee to carry out the terms of the trust. ”A trust will not fail for want of a trustee.”
Individual Trustees & Corporate Trustees
A trustee can be one or more people, or can be what is known as a corporate trustee. Many banks, other financial institutions, and even a few law firms, have trust departments to manage trusts and carry out the duties of the trustee. These are professional trustees and, of course, charge fees for services rendered. But, there are no formal requirements for being a trustee, and individuals still often serve as trustee for family members and friends.
Questions? Let’s Talk.
This hopefully clarified the important role of trustee to assist your estate planning decisions, but you may have questions…which is great! Contact me to discuss further the status of your estate plan and your trustee decisions. Reach me by email at firstname.lastname@example.org or phone at 515-371-6077.