Trustee: Overview, definition and example
What is a trustee?
A trustee is a person or organization responsible for managing and administering assets held in a trust on behalf of the trust’s beneficiaries. The trustee has a fiduciary duty to act in the best interests of the beneficiaries, according to the terms set out by the trustor.
Why is a trustee important?
The trustee is important because they ensure that the trust is properly managed and that the assets are used as intended by the trustor. They handle decisions related to the assets, including investments, distributions, and compliance with legal requirements. A trustee must be impartial, act in good faith, and follow the rules laid out in the trust agreement.
Understanding the trustee through an example
Imagine a trustor who creates a trust to provide for their children’s education. The trustor names a trustee to manage the funds, ensuring the money is used for tuition, books, and other education-related expenses. The trustee is responsible for making sure that the funds are used properly and only for the intended purposes.
In another case, a business owner might create a trust to pass on assets to family members. The trustee’s job is to manage the assets and distribute them to the beneficiaries according to the terms set by the business owner in the trust document.
Example of a trustee clause
"The Trustee shall hold and manage the assets specified in Schedule A in accordance with the terms of this trust and for the benefit of the Beneficiaries as described herein."
Conclusion
A trustee plays a critical role in ensuring that a trust is administered according to the trustor’s wishes. They are responsible for managing the trust’s assets, making decisions that align with the trustor’s instructions, and ensuring the proper distribution to beneficiaries. Understanding the role of a trustee is essential for anyone involved in a trust arrangement.
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.