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An individual or corporation named by an individual, who sets aside property to be used for the benefit of another person, to manage the property as provided by the terms of the document that created the arrangement.
A trustee manages property that is held in trust. A trust is an arrangement in which one person holds the property of another for the benefit of a third party, called the beneficiary. The beneficiary is usually the owner of the property or a person designated as the beneficiary by the owner of the property. A trustee may be either an individual or a corporation.
Trusts are useful for investment purposes, and they offer various tax advantages. Another purpose of trusts is to keep the trust property, usually money, out of the hands of the owner. This may be desirable if the beneficiary of the trust is incompetent, immature, or a spendthrift.Trustees have certain obligations to the beneficiary of the trust. State statutes may address the duties of a trustee, but much of the law covering such obligations is often found in a state's case law, or court opinions.
A trustee is a fiduciary of the trust beneficiary. A fiduciary is legally bound to act, within the confines of the law, in the best interests of the beneficiary. A trustee is in a special position of confidence in relation to the beneficiary because the trustee has control of property that is essentially owned by the beneficiary.
Most trustees possess special knowledge about trusts and investments. By contrast, many beneficiaries are ignorant of such matters. This special knowledge is another feature of the trustee-beneficiary relationship that makes a trustee a fiduciary. A trustee must submit honest reports to the beneficiary and keep the beneficiary informed of all matters relevant to the trust.
Trustees must fulfill the terms of the trust, which address such matters as when and how the trust property will be given to the beneficiary and the kinds of transactions the trustee may conduct with the trust property. Unless the terms of the trust state otherwise, a trustee may invest trust property but must use reasonable skill and judgment in making the investments. In some states a trustee is required by statute to make certain investments under certain conditions, but most states let trustees decide on their own whether to invest the trust property. However, a trustee may not invest property if it is prohibited by the terms of the trust.
In Bankruptcy cases a court may appoint a trustee to manage the funds of the insolvent party. Trustees who are appointed by bankruptcy courts are paid for their services from public funds. Trustees who manage trusts for private parties also are paid for their services, but their compensation comes from the creator of the trust or from the trust's funds.
n. a person or entity who holds the assets (corpus) of a trustee for the benefit of the beneficiaries and manages the trust and its assets under the terms of the trust stated in the Declaration of Trust which created it. In many "living trusts" the creator of the trust (trustor, settlor) names himself/herself (or themselves) as the original trustee who will manage the trust until his/her death when it is taken over by a successor trustee. In some trusts, such as a "charitable remainder unitrust," the trustee must be independent and therefore cannot be the creator of the trust. If a trustee has title to property, he/she/it holds title only for the benefit of the trust and its beneficiaries. (See: trust, trustor, settlor)
trusteea person appointed to hold TRUST property and, in the case of an active trust, to administer it for the benefit of the beneficiaries. In the ordinary case, trusteeship will be ‘full’ in the sense that the trustees will have vested in them the property subject to the trust together with the powers of management enabling them to discharge their functions. However, under the Public Trustee Act 1906, provision was made for trust corporations to act as custodian trustees holding the legal title to the trust property and being responsible for its safekeeping but without any powers of management.
A judicial trustee is a special trustee appointed by and under the control of the court under the Judicial Trustees Act 1896. The court will not appoint a judicial trustee in the absence of special circumstances warranting it; an example of a case where such an appointment might be warranted would be where a trustee was also a beneficiary and where there was a conflict of interest between his duties as a trustee and his position as a beneficiary.
A trustee may be removed either under an express power conferred in the trust instrument or by the court under the provisions of Section 36 of the Trustee Act 1925 where he has become unfit to act (through physical or mental incapacity) or has been abroad for more than 12 months.
The office of trustee is a gratuitous one, with the consequence that, in general, while trustees may be reimbursed for expenses properly incurred, they may not receive remuneration. To this general rule there are a number of exceptions, the most important of which is where the trust instrument expressly empowers trustees to charge for their services. Additionally, the court may, if it considers it in the interests of the trust, authorize charges to be made or to be increased. A trustee is personally liable for any loss to the trust estate caused by or resulting from any breach of trust committed by him, whether that breach was deliberate (i.e. fraudulent) or negligent. However, Section 61 of the Trustee Act 1925 provides that the court may absolve a trustee from such liability if he can demonstrate that he had acted honestly and reasonably and that he ought fairly to be excused.
TRUSTEE, estates. A trustee is one to whom an estate has been conveyed in
2. The trust estate is not subject to the specialty or judgment debts of the trustee, to the dower of his wife, or the curtesy of the husband of a female trustee.
3. With respect to the duties of trustees, it is held, in conformity to the old law of uses, that pernancy of the profits, execution of estates, and defence of the land, are the three great properties of a trust, so that the courts of chancery will compel trustees, 1. To permit the cestui que trust to receive the rents and profits of the land. 2. To execute such conveyances, in accordance with the provisions of the trust, as the cestui que trust shall direct. 3. To defend the title of the land in any court of law or equity. Cruise, Dig. tit. 12, c. 4, s. 4.
4. It has been judiciously remarked by Mr. Justice Story, 2 Eq. Jur. Sec. 1267, that in a great variety of cases, it is not easy to say what the duty of a trustee is; and that therefore, it often becomes indispensable for him, before he acts, to seek, the aid and direction of a court of equity. Fonb. Eq. book 2, c. 7, Sec. 2, and note c. Vide Vin. Ab. tit. Trusts, O, P, Q, R, S, T; Bouv. Inst. Index, h.t.