How a Trustee Works

Someone who manages and oversees the administration of your property rights on your behalf is called a trustee. By signing this official form, you are transferring certain property rights to the trustee. One way to think of a trustee is as a proxy for you who has the special legal power necessary to act on your behalf.

The legal right to possess and use anything of value, such as money, buildings, investments, or automobiles, is referred to as property. Examples of property include money, buildings, and vehicles. The term "property" may also refer to a company's assets, such as intellectual property, which might include copyrights and patents.

Trustees vs. Executors

An executor is a specific trustee appointed by a person before that person's death to oversee the administration of the person's will and estate and the distribution of the person's possessions after the person has passed away. An individual, a bank, or a trusted business may serve as an estate's executor. In certain jurisdictions, this role is referred to as the personal representative.

Trustees can get engaged with an estate provided the will includes provisions for a trust. A "testamentary trust" is the term used for anything like this. A trustee designated in the will is responsible for administering the trust after it has been established and certain estate assets have been transferred into it from the executor's possession. After the executor finishes administering the testamentary trust's formation, the trustee takes over the management of the trust.

Different kinds of trustees

A trust is a legal instrument established by a person to safeguard their assets and, after their death, to protect their beneficiaries, who are authorized to inherit the assets. A trust may also be established to protect the beneficiaries after the individual's death.

Choosing a trustee is one of the most important steps in establishing a trust. You can choose a trustee for estate planning, tax planning, medical planning, and charity giving. That trustee can manage and invest trust property during the trust maker's lifetime, after the trust maker's death, or both. The following are some examples of certain sorts of trustees:

Investment Trustees

These trustees are responsible for making day-to-day decisions on the investments held in a personal portfolio or an investment account held by a company.

Successor Trustees

When the person who created the trust passes away or becomes disabled and cannot handle their own affairs, the responsibility for doing so passes to these trustees. In this scenario, the person who established the trust serves as the first trustee, and the person who will succeed them serves as the second trustee.

Bankruptcy Trustees

If a person or corporation files for bankruptcy, these special trustees are responsible for its administration and oversight. They are appointed by the U.S. Trustee and work under the Department of Justice. During the period of administration that occurs before the bankruptcy is discharged, they will often assume legal authority over the assets.

Charitable Trustees

These individuals oversee the administration of a charitable trust and ensure that its assets are donated to the organizations to whom the trust's owner has assigned them by their desires.

Responsibilities of a Trustee

A trustee must act in the designator's best interests as a fiduciary. When acting on behalf of the person who drafted the will or established the trust or estate, the fiduciary is placed in a position of trust. A fiduciary's responsibilities include the following:

• An inventory and accounting of all of the assets in the person's estate and trust
• Respect for the individual's choices and preferences
• Respect for any legitimate directives issued by the designator

Other responsibilities of a trustee include the following:

• Performing one's duties is in line with the trust agreement, provided that the conditions do not violate applicable laws.
• Avoiding any conflicts of interest, maintaining objectivity about the beneficiaries, and placing primary emphasis on the document
• separating the property and assets held by the trust from those owned by any other person or entity.
• Employing a level of care and expertise commensurate with the administration of the trust and the investment of its assets and property
• Investing in various things, unless doing so, wouldn't be sensible.
• Keeping meticulous notes on everything
• Providing beneficiaries and government entities at the state and federal levels with periodic reports.