Trustee

Lore & Background

Trustees have certain duties, including carrying out the expressed terms of the trust instrument, defending the trust, prudently investing trust assets, being impartial among beneficiaries, accounting for actions, and keeping beneficiaries informed. They must be loyal, not delegate, not profit (unless the trust provides for payment), and avoid conflicts of interest. The modern interpretation of fiduciary duty requires consideration of environmental, social, and governance factors as long-term investment value drivers. Trustees are generally held to a 'prudent person' standard, though professionals may be held to a higher standard.

Reader's Guide

The concept of a trustee is central to trust law, allowing property to be held and managed for the benefit of others, whether individuals or charitable purposes. Trustees carry fiduciary responsibility and liability to use trust assets according to the trust instrument, and may be personally liable for excess liabilities. The terms of the trust instrument may narrow or expand duties, but in most instances they cannot be eliminated. Corporate trustees, such as trust departments at large banks, often have very narrow duties limited to what the trust indenture defines. In specific contexts, directors of banks may be trustees for depositors, directors of corporations for stockholders, and guardians for wards' property. In US local government, a trustee may be a member of a village board of trustees, managing village property, finances, safety, and general welfare.

Did You Know?

• A trustee may be a person or company, regardless of whether they are a prospective beneficiary.
• Trustees do not have a priority right to trust documents; it is a personal right and cannot be assigned.
• Trustees can be paid for their time only if the trust specifically provides for payment.