A trustee can be an individual, such as a family member, friend, or trusted advisor (e.g., lawyer or accountant) or an institution, such as a bank or trust company. Each type of trustee has strengths and weaknesses which should be carefully weighed by the donor (see below).
A trust deed gives the third-party “trustee” (usually a title company or real estate broker) legal ownership of the property.
The trustee's job is to fulfill the trust agreement themselves or with help, so they can hire a CPA for tax advice and a financial advisor for investment advice. People can also name several trustees from the beginning, including a bank, a friend and a family member.
Selecting an individual trustee
Choosing a friend or family member to administer your trust has one definite benefit: That person is likely to have immediate appreciation of your financial philosophies and wishes. They'll know you and your beneficiaries.
Anyone 16 and over (18 for an Unincorporated Association or Charitable Trust) who is not 'disqualified' can be a Trustee. The reasons for disqualification were set down by the Charities Act 2011, and were designed to prevent people convicted of financial crimes, or who made serious financial errors, becoming trustees.
Trustees are not usually subject to court supervision (unlike executors in court supervised probates). Trustees, and Special Trustees and Trust Protectors are the persons entrusted with the proper implementation of a Trust in a managerial or oversight capacity.
A trustee is often designated by the original owner of the assets, called the trustor. In some cases, a trustee may be assigned by a court. A trustee may be appointed for various purposes, such as in the case of bankruptcy, for a charity, or for a trust fund.
Mortgage payments must be made from the trust's assets. Because the grantor retains control and ownership in a revocable living trust, they remain liable for the mortgage. This is helpful if the trust lacks liquid assets. You might also find information about closing costs, escrow and pricing your home.
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.
Typically, a revocable trust with clear provisions for outright distribution might conclude within 12 to 18 months. However, in simpler cases, the process can take an average of 4 to 5 months without complications.
Depending on the complexity of the case, it may cost anywhere from a few thousand dollars to $100,000 or more to dispute the terms of a trust.
Typical choices are the grantor's spouse, sibling, child, or friend. Any of these may be an acceptable choice from a legal perspective, but may be a poor choice for other reasons. For example, some families would be torn apart if one sibling had to ask another for a distribution.
So, now you know that the Trust Maker holds the most power before the Trust is established, but the Trustee holds the most power after the Trust is established.
Trustees generally do not have the power to change the beneficiary of a trust. The right to add and remove beneficiaries is a power reserved for the settlor of the trust; when the grantor dies, their trust will usually become irrevocable. In other words, their trust will not be able to be modified in any way.
Friends and Family. Family members and friends may be closer to the beneficiaries and may be more likely to understand beneficiary needs as well as family dynamics. A friend or family member may generally still charge a reasonable trustee fee for serving in this role, but they usually don't charge an administrative fee ...
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.
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.
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.
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.
In essence, while both roles are powerful within their domains, trustees often have more enduring and autonomous control over the assets they manage.
Serving as the trustee of a trust instills a person with significant power. They have access to all the trust assets, but with a catch: They can only use those assets to carry out the instructions of the trust.
Trust beneficiaries can bring a claim against the trustee, so long as they have a valid reason. Valid reasons for trust beneficiaries suing a trustee include: The trustee misused or misappropriated trust assets for personal gain (e.g., trustee sold trust property and kept the proceeds from the sale).
The answer is a resounding yes. The ability to seek removal and replacement of a trustee is one of your most important rights as a trust beneficiary. And it may be the only option you have for ensuring you receive your rightful inheritance from a deceased loved one's trust.