Trustee definition: 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
People can use trusts to manage how their property is distributed. The trustee is the person who manages the property held in the trust for the benefit of the beneficiaries named in the trust. The trustee is legally required to act in in the best interests of the beneficiaries.
The trust itself will spell out the trustee’s specific responsibilities. In general, however, the trustee must file an annual income tax return, properly invest and manage the assets held in the trust, and distribute the income earned in the trust to its beneficiaries. Trustees are also legally obligated to act impartially when it comes to dealing with beneficiaries.
(Note: the term “personal representative” is the current legal term used to refer to an executor/executrix, administrator/administratix, and judicial trustee.)
Trustees and Wills
Sometimes people include trusts in their wills. For example, a parent may want shares held in a trust until the children reach a specific age. If the personal representative is required to hold property in trust, he or she then becomes a trustee until the property is distributed.
Trustees and personal representatives have some different technical responsibilities but that is usually irrelevant for practical purposes.
If a will includes a trust, the personal representative first acts as an executor, although there may be some trustee functions to take care of. Once the executor duties are completed and the estate has been distributed, the personal representative then acts as a trustee.
As a trustee, your responsibilities include:
- Investing and managing the trust’s assets
- Deciding on encroachments for the maintenance, education, and advancement of the beneficiaries in a way that is consistent with the directions written in the will
- Filing the trust’s tax returns and paying the taxes
- Distributing the trust’s assets at the appropriate time
- Accounting to the trust’s beneficiaries
If the amount of money in the trust is large and to be held for a long time, the trustee must have an investment plan. It is advisable that the plan meet the requirements of the prudent investor rule in the Trustee Act. The trustee may consider hiring a professional investment advisor.