All About Trustee and Full Meaning
What is a Trustee?
A trustee is an individual or company that holds or manages property or assets on behalf of another party. You can appoint a trustee for many reasons, including bankruptcy, charity, trust fund, and certain types of pensions or retirement plans.
Trusted to make decisions for the beneficiary’s best interest, trustees often have a fiduciary obligation meaning that they act in the best interest of trust beneficiaries to manage their assets.
The Key Takeaways
- A trustee is an individual or company that holds or manages property or assets on behalf of another party.
- There are many reasons a trustee could be appointed, including for bankruptcy, charity, or trust fund purposes.
- Trusted to make decisions for the beneficiaries’ best interests, trustees have a fiduciary obligation to trust beneficiaries.
How a Trustee works
Any person or organization that holds the legal title to an asset or group of assets for another person is called a trustee. This type of legal title is granted to a trustee through a trust. A trust is an agreement between two parties.
A trust is basically a relationship where a person or entity owns assets (known as a trustee) and grants the trustee the right of holding title to the assets or property for the benefit of a third party (known as the trust beneficiary). To provide legal protection to the assets of the trustor or to ensure proper distribution, a trust could be established. The trustee is responsible for ensuring that the trustor’s wishes are carried out.
The trustee is responsible for managing all assets and property owned by the trust to the benefit of beneficiaries. The trust agreement defines the specific duties of a trustee. They are determined by the assets held in trust. For example, trustees will have to supervise land parcels that are part of a trust made up of different real estate properties.
When trust is comprised of other investments such as equities, brokerage accounts, or stocks, Trustees must also manage and supervise financial accounts.
Trust trustees are usually required to fulfill a fiduciary obligation to the trust they supervise. This means that they must put aside their personal goals and pursue the best interests of the trust.
Take Note
General guidelines and responsibilities apply to all trustees, regardless of whether the trust agreement is specific. All assets must be verified as safe and under trustee control. This includes understanding the trust’s unique terms and the wishes of beneficiaries. All investable assets must be considered productive for the benefit of the beneficiaries in the future.
Trustees must be able to read and comprehend the trust agreement and administer any trust assets to the appropriate beneficiaries or parties. A trust could be set up to fund education for the trustor’s grandchildren. The trust agreement might specify the expenses that can be paid with trust money, such as tuition or books. It would be up to the trustee to honor these details.
The trust’s trustees are required to prepare all records, including tax returns and financial statements. The Trustees must communicate regularly with beneficiaries and keep them updated on taxes and accounts.
All trustees are the ultimate decision-makers in trust matters and must follow the trust agreement. This includes answering beneficiaries’ questions before making a decision.
