Concerning the trustee: Overview, definition, and example
What is concerning the trustee?
Concerning the trustee refers to provisions, clauses, or stipulations in a trust agreement that define the rights, duties, responsibilities, and powers of the trustee. The trustee is the individual or institution appointed to manage and administer the trust according to its terms, for the benefit of the beneficiaries. This section of the trust agreement outlines how the trustee is expected to act, their obligations, and any limitations on their authority. It also often addresses the trustee's compensation, removal, and succession procedures.
Why is concerning the trustee important?
This section is important because it establishes the framework within which the trustee must operate, ensuring that they fulfill their duties properly and in accordance with the trust's purpose. By clearly outlining the trustee's responsibilities and limitations, the trust agreement helps prevent conflicts or misunderstandings between the trustee and beneficiaries. It also helps safeguard the interests of the beneficiaries by ensuring the trustee is held accountable for their actions, and it may provide protections or remedies in case the trustee fails to meet their obligations.
Understanding concerning the trustee through an example
Imagine a family trust set up by a father to benefit his children. The trust agreement includes a section concerning the trustee, outlining the trustee's powers, such as the ability to sell property, make investments, or distribute assets. It also specifies that the trustee must act in the best interests of the children and cannot make decisions that would personally benefit the trustee. If the trustee fails to follow the rules set out in the agreement or acts in bad faith, the children, as beneficiaries, can seek legal remedies based on the "concerning the trustee" provisions.
In another example, a charitable trust may appoint a nonprofit organization as the trustee. The trust agreement may specify that the trustee is responsible for managing the funds to support certain charitable causes. The agreement will outline the trustee’s obligations, the permissible investment strategies, and how funds are to be distributed. If the trustee mismanages the funds or acts outside of the specified terms, the trust agreement provides the basis for accountability.
An example of concerning the trustee clause
Here’s how a concerning the trustee clause might appear in a trust agreement:
“Concerning the Trustee, the Trustee shall have full authority to manage, invest, and distribute the assets of the Trust in accordance with the terms herein. The Trustee shall act with due diligence and in the best interests of the beneficiaries, and shall not make decisions that result in personal gain for the Trustee, except for reasonable compensation as described in Section [X]. The Trustee may be removed by the Settlor or the beneficiaries upon agreement or for cause, including failure to meet the obligations of this Trust.”
Conclusion
"Concerning the trustee" provisions in a trust agreement are essential for outlining the trustee's role and ensuring that they manage the trust's assets properly and in accordance with the trust’s terms. These provisions help protect the interests of the beneficiaries by holding the trustee accountable for their actions, while also providing clarity on how the trustee should perform their duties. Clear terms regarding the trustee’s authority, responsibilities, and potential removal or succession ensure the smooth operation and administration of the trust.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.