Trustee

What is a Trustee?

To better understand the role of a trustee, you must first understand what a trust is and how it functions. In general terms, a trust is an agreement under which a person transfers property or other assets to another person (the trustee) under certain conditions outlined in a document called a trust agreement.

In order to ensure those conditions are met and the terms of the trust agreement are upheld, a trustee is selected to serve as an intermediary who will manage the assets in the trust. The trustee can either be an individual or an institution, referred to as a corporate trustee.

Trustees make decisions about how to manage assets based on the trust agreement. Sometimes they are investment professionals, and in other cases they are family members or loved ones appointed to uphold the trust document. 

The job has administrative and legal obligations as well. Trustee duties can include filing tax returns and taking the necessary steps to distribute assets to beneficiaries. Accurate tax filings and reports are a critical part of wealth management, and the trustee serves an important role in ensuring they’re done right.

For a better understanding of a trustee’s role in managing a trust, check out LegalZoom’s comprehensive guide to trustees.

FAQs 

Can you have more than one trustee?

Yes, and in many cases multiple trustees can be helpful if not necessary in effectively managing a trust. Situations can arise that can present conflicts of interest for your trust’s managers, particularly if one or more trustees are family members of the assets’ original owners. Naming multiple co-trustees and using financial institutions as corporate trustees can be valuable tools for the effective management of your assets. You can also name successor trustees to take over if the primary trustees are unable to do so.

Can you fire a trustee?

Yes, if you are the owner of a revocable trust, you can amend the trust and remove the trustee. Otherwise, the laws governing the removal of a trustee can vary from state to state, and usually involves filing a trustee removal petition with the court system. This petition will be reviewed in light of evidence of wrongdoing provided by the beneficiary submitting the petition before a decision is made on the removal of the trustee.

Does a trust have to have a trustee?

Yes, and most states have a legal process by which a new one will be appointed if all of a trust’s trustees die or are otherwise no longer able to perform their duties. The restrictions on who can serve as the trustee are relatively minimal in most places, usually only requiring the trustee to be at least 18 years old and is not explicitly disqualified from serving in the role.