The three main roles for people involved in a trust are the trustmaker, the trustee, and the beneficiaries. Each role is distinct, so knowing the difference in function is important.
There are three roles in a trust someone can fill: grantor, beneficiary, and trustee.
A Trustee is a person who acts as a custodian for the assets held within a Trust. He or she is responsible for managing and administering the finances of a Trust per the instructions given. Often, the person who creates the Trust is the Trustee until they can no longer fill the role due to incapacitation or death.
A trust is a fiduciary1 relationship in which one party (the Grantor) gives a second party2 (the Trustee) the right to hold title to property or assets for the benefit of a third party (the Beneficiary).
'Position of trust' is a legal term that refers to certain roles and settings where an adult has regular and direct contact with children. Examples of positions of trust include: teachers. care workers.
Generally speaking, once a trust becomes irrevocable, the trustee is entirely in control of the trust assets and the donor has no further rights to the assets and may not be a beneficiary or serve as a trustee.
The trustee manages the trust and distributes its assets at a prescribed time. The trustee is in charge of managing the assets in an irrevocable trust while the grantor is still alive.
The trustee generally has the authority to withdraw money from a trust to cover the cost of third-party professionals, as well as any other expenses arising as a result of administration.
Selecting the wrong trustee is easily the biggest blunder parents can make when setting up a trust fund. As estate planning attorneys, we've seen first-hand how this critical error undermines so many parents' good intentions.
From a legal standpoint, the trust itself is the official owner of any assets that have been retitled and transferred into it – not you as an individual.
It is not unusual for the successor trustee of a trust to also be a beneficiary of the same trust. This is because settlors often name trusted family members or friends to both manage their trust and inherit from it.
A trustee is responsible for oversight and management of a trust to ensure that the trust agreement is followed. A trust can be established by someone while they are alive for the benefit of another, in which case they must name the trustee and fund the trust.
The results of Sweeney's research were enlightening. He found three factors central to soldiers trusting their leaders. Sweeney calls these factors the “3 C's” of trust: Competence, character, and caring.
A trust provides a mechanism for a person (the settlor) to provide property to another person (the trustee) for the benefit of a third person (the beneficiary or beneficiaries) while imposing certain restrictions and conditions over the property. The property is held and administered by the trustee.
The creator, trustee, and beneficiary may all be different people. The same person may be the creator and the trustee. The same person may be the trustee and the beneficiary. As is often the case with a revocable trust, the creator, trustee, and beneficiary are the same person.
It is possible to be both a member and a trustee of your Charity. This guide should help you to understand the legal implications of the terms - and help you ensure good governance when performing your duty. The terms can incorrectly become interchanged which can cause confusion and may have legal implications.
A trustee typically has the most control in running their trust. They are granted authority by their grantor to oversee and distribute assets according to terms set out in their trust document, while beneficiaries merely reap its benefits without overseeing its operations themselves.
Establishing and maintaining a trust can be complex and expensive. Trusts require legal expertise to draft, and ongoing management by a trustee may involve administrative fees. Additionally, some trusts require regular tax filings, adding to the overall cost.
The grantor can set up the trust so the money is distributed directly to the beneficiaries free and clear of limitations. The trustee can transfer real estate to the beneficiary by having a new deed written up or selling the property and giving them the money, writing them a check or giving them cash.
WHO IS THE “RIGHT” TRUSTEE? A natural first inclination is to consider a family member or trusted friend who knows you and your philosophies and values well. Family or friends may personally know your beneficiaries and their needs.
All in the family
In most instances, clients select family member trustees for both emotional and financial reasons. Clients may believe that a family member will have an emotional attachment to the beneficiary of the trust and as trustee will stick with the job, come what may.
An owner of a trust account is the person who has the powers to modify or revoke the terms of the trust, referred to as the trustor/grantor/settlor within the trust.
While trustees may temporarily be able to delay trust distributions if a valid reason exists for them doing so, they are rarely entitled to hold trust assets indefinitely or refuse beneficiaries the gifts they were left through the trust.