Generally, individuals under 18, those lacking mental capacity, and people with unspent convictions for dishonesty (e.g., fraud, theft) cannot act as a trustee. Other disqualified individuals include undischarged bankrupts, those removed for misconduct, and people failing to meet specific legal requirements, such as those subject to property management orders.
If they have unspent convictions for offences of dishonesty or deception (an offence of dishonesty or deception is one where dishonesty or deception must be proved for someone to be convicted. It doesn't just mean dishonesty or deception was involved in committing the offence).
The trustee can be an individual, a corporate trustee, or a combination of both. Naming a trusted family member has some advantages, but a corporate trustee has expertise that a family member typically doesn't have.
The trustee holds the real legal power to manage and control trust assets, acting as the legal owner, but they have a strict fiduciary duty to follow the trust's written terms and act solely in the best interest of the beneficiaries, who hold the beneficial interest (the right to receive benefits). While the trustee has management power, beneficiaries have rights to information and can hold trustees accountable if they breach their duties, separating legal control from beneficial enjoyment.
Generally, a beneficiary cannot simply "override" a trustee just because they disagree; the trustee has authority to manage assets per the trust document, but beneficiaries can take legal action to challenge a trustee who is breaching their fiduciary duty, failing to follow trust terms, or mismanaging assets, potentially leading to court-ordered changes or trustee removal. Actions like self-dealing, refusing information, or reckless investments are grounds for intervention, often requiring court petitions to compel action or replace the trustee, especially if the trust document doesn't provide simpler out-of-court mechanisms.
Neither role is more powerful. Trustees manage trust assets with less Court oversight. Executors work under probate Court supervision, focusing on property within the probate estate. The legal authority of each role is determined by its respective document (trust or Will).
As previously mentioned, you can be your own trustee if you have a revocable living trust. If you are married, your spouse can be a co-trustee. If either of you cannot manage your affairs or dies, the other can usually continue to handle your financial affairs without interruption.
The Trustees will often be close family members and/or friends. They can also be professionals such as solicitors or accountants, but they will normally charge for their services. Trustees have a duty to act in the best interests of the Beneficiary and ensure that the Trust Fund is used for their benefit.
For example, a trustee should not borrow funds from a trust or purchase assets from (or sell assets to) the trust, at least not without full disclosure and consent of the beneficiaries. The trustee's duty of loyalty also prevents a trustee from favoring one beneficiary (or class of beneficiaries) over another.
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.
A trustee can end up having to pay taxes out of their own personal funds if they fail to take action on behalf of the estate in a timely way. Of course, they can also face criminal liability for such crimes as taking money out of a trust to pay for their own kids' college tuition.
Non-professional trustees are usually family or friends of the person who created the trust. Their fees typically range between 0.5% to 1% of the value of trust assets every year or $30 to $75 per hour. Some non-professional trustees may even choose not to take any compensation at all.
The primary trust that avoids probate is a Revocable Living Trust, also called an Irrevocable Trust. This trust holds assets separate from the individual, allowing a successor trustee to manage and distribute them to beneficiaries after death without court involvement, bypassing the lengthy, public, and costly probate process. Both revocable and irrevocable trusts can avoid probate, but revocable trusts offer control during life, while irrevocable trusts offer more asset protection.
Yes, a trustee can also be a beneficiary, but this arrangement can increase the risk of conflicts of interest. Trustees must take extra care to avoid self-dealing and ensure that all decisions prioritize the best interests of all the beneficiaries.
The "5 and 5 rule," or 5 by 5 power, in trusts allows a beneficiary to withdraw the greater of $5,000 or 5% of the trust's value annually, offering flexibility for beneficiaries while providing tax and asset protection benefits, as the unused portion can lapse without being taxed as part of the beneficiary's estate, preventing unintended estate inclusion. It's a common trust provision that balances limited access for beneficiaries (e.g., for health or education) with the grantor's long-term asset control goals, preventing the beneficiary from having too much control (a "general power of appointment") that triggers taxes, say experts at The Werner Law Firm.
The three certainties of trust are essential legal requirements for a valid express trust, established in English law, ensuring clarity for enforceability: Certainty of Intention, meaning the creator clearly intended a trust, not a gift; Certainty of Subject Matter, requiring precise identification of the trust property; and Certainty of Objects, meaning the beneficiaries must be clearly defined.
The first in line for inheritance, when someone dies without a will (intestate), is typically the surviving spouse, followed by the deceased's children; if none, then the deceased's parents, then siblings, and then more distant relatives like grandparents or aunts/uncles, as determined by state laws (intestate succession).
If you have both a will and a Revocable Living Trust (estate planning trust), the individual or entity serving as executor and trustee could be the same. In fact, as a general rule, it is more efficient to have the same person in those two roles.