What is a Trustee? 8 Trustee Power Explained Super Simply!

In simple terms, the trustor creates the trust and puts the assets into it, the trustee manages those assets according to the trust’s terms, and the executor manages and distributes a deceased person’s assets according to their will.

The terms “beneficiary” and “trustee” refer to two different roles within a trust, a legal arrangement often used in estate planning.

The beneficiary is who the trust is designed to benefit, while the trustee is the person or legal entity is responsible for ensuring the trust is managed according to the trustor’s wishes for the benefit of the beneficiary.

Yes, a trustee can also be a beneficiary of a trust.

There’s no rule that prevents someone from serving in both roles. In fact, this is quite common, especially in family trusts. For instance, a parent may establish a trust and name their adult child as both a trustee and a beneficiary.

However, it’s important to note that even when the trustee is also a beneficiary, they still have a legal duty to act in the best interests of all beneficiaries, not just their own interests. This is known as fiduciary duty. If a trustee fails to uphold this duty, they can be held legally responsible.

A successor trustee is a person or entity (like a bank or a trust company) that takes over management of a trust when the original trustee can no longer fulfill their duties. This could happen for various reasons, such as if the original trustee passes away, becomes incapacitated, resigns, or is removed.

Their role is essentially the same as the original trustee. They are responsible for managing the assets of the trust according to the trust’s terms and in the interest of the beneficiaries.

The details regarding who will be the successor to the trustee and when and how they will take over should be outlined in the trust document.

Determining if a grantor (or trustor) of a trust is incapacitated can involve various steps, and the exact process might be defined in the trust document itself.

Typically, the trust document will contain a definition of incapacity and describe the procedure for determining whether the grantor meets this definition. This often involves a medical determination made by one or more physicians. The doctors would generally need to examine the grantor and certify that, in their professional opinion, the grantor is mentally incapable of managing their own affairs.

Once incapacity is determined according to the trust terms, a successor trustee can step in to manage the trust. This is a crucial reason why it’s important to name someone who is reliable.

A trustee in a trust is responsible for managing, protecting, and distributing the assets of the trust according to the terms set out by the trust’s creator (the grantor).

This can include investing assets, paying bills, filing tax returns, and making distributions to beneficiaries. The trustee acts in the best interest of the beneficiaries, upholding a duty of care, loyalty, and impartiality.

The trustee of a trust is not considered the legal owner of the trust’s assets in the traditional sense.

Instead, the trustee holds legal title to the trust property, but they do so for the benefit of the trust beneficiaries, who hold equitable title.

This is a fundamental concept of trust law: the separation of legal and equitable title.

In other words, while the trustee has the legal authority to manage and control the assets, they do so not for their own benefit, but for the beneficiaries. The trustee has a fiduciary duty to act in the best interest of the beneficiaries when managing the property of the trust.

The creator of the trust (known as the grantor, trustor, or settlor) typically determines who the beneficiaries will be, and may also be a trustee or beneficiary, depending on how the trust is set up. As always, it’s recommended to consult with a legal professional when dealing with trusts and estate planning.

A trustee is a person or organization that is given the responsibility of keeping records managing property or assets for someone else’s benefit. This property is held in a trust. The trustee must follow the rules of the trust, acting in the best interests of the person or people who are set to receive the benefits (the beneficiaries), and not for their own gain.

Both an executor and a trustee have important but different roles in estate management and both have significant powers and responsibilities, albeit in different contexts.

An executor is responsible for settling an individual’s estate after their death, according to the terms of their will. Alternatively, if the decedent does not have a will the executor or personal representative will appear before the probate court to follow the rules of intestate succession. Their powers are usually related to settling debts, filing tax returns, paying taxes on tax filings, distributing assets to beneficiaries, and overall, winding up the deceased’s affairs.

On the other hand, a trustee manages a trust according to the terms set by the trust’s creator, for the benefit of the trust’s beneficiaries. This can be during the creator’s lifetime and/or after their death, depending on the type of trust.

Therefore, it’s not so much a question of who has “more power,” but rather the context in which they exercise their responsibilities. The power of each is limited to the duties and terms laid out in the trust agreement or the will, respectively.

Whether the executor and trustee should be the same person depends on various factors. If the estate and trust affairs are straightforward, having the same person can simplify matters.

However, for larger or more complex estates, separate roles might distribute responsibility more effectively. Consider the person’s relationship with beneficiaries and the potential for conflict, especially if they’re also a beneficiary. 

In California, a trustee is held accountable in several ways:

1.     Fiduciary Duties: A trustee has a legal and fiduciary responsibility. They are required to act in the best interest of the beneficiaries. This includes duties of loyalty, care, and full disclosure. They must manage the trust property responsibly, keep accurate records, and avoid any conflicts of interest.

2.     Legal Action: If a trustee fails to fulfill their duties, beneficiaries can take legal action. They can ask the court to compel the trustee to provide an accounting, to fulfill their duties, or even to remove the trustee if necessary.

3.     Accounting Requirement: In California, trustees are required to provide a periodic accounting to beneficiaries. This accounting must detail the trust holdings, liabilities, receipts, and disbursements, including the trustee’s compensation.

Remember, the rules governing trusts can be complex, and this is a broad overview.

A trustee, as a fiduciary, owes a high level of duty to the beneficiaries of the trust. This fiduciary duty encompasses several key responsibilities:

1.     Duty of Loyalty: A trustee must act solely in the best interests of the beneficiaries when managing the property of the trust. They should avoid self-dealing and conflicts of interest.

2.     Duty of Care: A trustee must manage the assets of the trust with a high standard of care, using good judgment and skill. They must be diligent and prudent in managing the trust’s affairs.

3.     Duty of Impartiality: A trustee must act fairly and impartially when dealing with beneficiaries, especially if there are multiple beneficiaries with different interests.

4.     Duty to Account and Inform: Trustees must keep accurate records and regularly provide the beneficiaries with information about the trust, including any significant actions taken, the assets and liabilities of the trust, and any changes to the trust.

5.     Duty to Follow Trust Terms and Law: The trustee is obliged to follow the terms of the trust and the applicable law in administering the trust.

Violations of these duties can lead to legal consequences, including potential removal and personal liability for any harm caused to the asset’s of the trust.

Being a trustee of an estate means you’re responsible for managing a trust that has been created as part of an individual’s estate plan. Unlike an executor who manages a person’s will after their death, a trustee’s role can begin either during the lifetime or after the death of the person who created the trust (known as the grantor or settlor), depending on the type of trust.

As a trustee, you’re tasked with safeguarding and managing the trust property for the benefit of the trust’s beneficiaries according to the terms of the trust document. This involves duties like investing assets wisely, distributing trust assets to beneficiaries as the trust document dictates, and keeping records.

You also have a fiduciary duty to act in the best interests of the beneficiaries, which means you must manage the trust property responsibly and avoid conflicts of interest. The role can require significant time and effort, and it comes with a high level of legal responsibility.

A trustee is a third party who is authorized by a settlor to execute and manage the assets of a trust. A trustee holds the title of the trust asset.  A trustee is a requirement of an express trust along with trust property, trust intent, and definite beneficiaries

A trustor (also called grantor or settlor) creates the trust. A trustee manages the trust assets. An executor handles a deceased person’s will through probate court. Trustees and executors serve different roles: trustees manage trust assets (which avoid probate), while executors handle assets that pass through a will (which require probate). Many California families name the same person for both roles, but the legal responsibilities differ significantly.

Yes. This arrangement is extremely common in California living trusts. When you create your trust, you typically serve as grantor, trustee, and beneficiary simultaneously. After you pass away, it’s also common for an adult child to serve as successor trustee while also being a beneficiary. However, a trustee who is also a beneficiary must be especially careful to treat all beneficiaries fairly and document that their decisions serve everyone’s interests, not just their own.

Generally, no. The trustee must follow the trust’s terms as written by the grantor. A trustee cannot unilaterally remove beneficiaries or change how assets are distributed. The grantor can modify beneficiaries while alive (if the trust is revocable), but once the grantor passes and the trust becomes irrevocable, the beneficiary designations are typically fixed. Some trusts give trustees limited discretion in distributions, but removing a beneficiary entirely would require court approval and extraordinary circumstances.

Most well-drafted California trusts include incapacity provisions specifying how this determination is made. Typically, the trust requires certification from one or two licensed physicians stating that the grantor can no longer manage their financial affairs. Some trusts allow family members to initiate this process by requesting a medical evaluation. The specific procedure should be clearly outlined in your trust document.

If a grantor’s incapacity was temporary (for example, recovery from a serious illness or injury), they can typically resume their role as trustee. Most trusts require the same physician certification process in reverse: a doctor certifies the grantor has regained capacity. The successor trustee then transfers management back to the original trustee. This flexibility is one advantage of using a revocable living trust rather than relying solely on a durable power of attorney.

Under California Probate Code Section 15681, trustees are entitled to reasonable compensation for their services. Family member trustees often waive compensation, but they’re legally entitled to it. Professional trustees typically charge annual fees of 1-2% of trust assets. The trust document may specify compensation terms, or the trustee and beneficiaries can agree on reasonable payment. For complex trusts, trustee compensation reflects the significant time and responsibility involved.

Often, yes. Naming the same person simplifies estate administration since they’ll coordinate both trust and probate assets (if any). However, the roles have different requirements and timelines. An executor’s job typically ends when probate closes, while a trustee might manage assets for years. Consider whether your chosen person can handle both responsibilities. For estates with both significant trust and probate assets, some families name the same person for both roles but specify that professional help should be retained.