Investopedia/Julia Kagan: What is a Trustee

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Retirement
Trustee
Reviewed by Julia Kagan
Updated Feb 2, 2018
What is a Trustee

A trustee is a person or firm that holds and administers property or assets for the benefit of a third party. A trustee may be appointed for a wide variety of purposes, such as in the case of bankruptcy, for a charity, for a trust fund or for certain types of retirement plans or pensions. Trustees are trusted to make decisions in the beneficiary's best interests and often have a fiduciary responsibility to the trust beneficiaries.
BREAKING DOWN Trustee

A trustee is any type of person or organization that holds the legal title of an asset or group of assets for another person, referred to as the beneficiary. A trustee is granted this type of legal title through a trust, which is an agreement between two consenting parties. Trustees usually have a fiduciary duty to the trust they oversee, which means they are required to put aside personal goals and initiatives to do what's best for the trust.

Therefore, a trustee is responsible for the proper management of all property and other assets owned by the trust for the benefit of a beneficiary. A trustee's specific duties are unique to the agreement of the trust and are dictated by the type of assets being held in trust. If, for example, a trust is comprised of various real estate properties, it will be the trustee's duty to oversee those pieces of land. Trustees are also required to financially manage and oversee accounts within a trust when it is made up of other investments, like equities in a brokerage account.
Guidelines for a Trustee

All trustees have general guidelines and responsibilities, regardless of the specificity of the trust agreement. All assets must be confirmed as safe and under the control of the trustee. This includes understanding the potentially unique terms of the trust and the desires of the beneficiaries. Any investable assets have to be considered productive for the future benefit of the beneficiaries.

Trustees must interpret and understand the trust agreement and be able to administer the distribution of any trust assets to the proper parties or beneficiaries. They are also required to prepare any and all records on behalf of the trust, including statements and tax returns. Trustees are expected to communicate with beneficiaries on a regular basis and keep them informed on the associated accounts and taxes. Finally, all trustees are considered the decision-makers for all matters of the trust and make those decisions based on the provisions outlined in the trust agreement. This includes finding answers to any questions that beneficiaries may have prior to making the decision.
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Related Terms
Acceptance of Office By Trustee
An acceptance of office by a trustee implies that they will assume administrative duties of an estate after being nominated.
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Bankruptcy Trustee
A bankruptcy trustee is a person appointed by the United States Trustee to represent the debtor's estate during a bankruptcy proceeding.
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Personal Trust
A personal trust is one that a person creates for him or herself as the beneficiary.
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Discretionary Beneficiary
Discretionary beneficiaries are individuals or entities that a grantor names in a trust, life insurance policy, or retirement plan that have no legal proprietary interest.
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Fiduciary Negligence
Fiduciary negligence is professional malpractice when a person fails to honor his or her fiduciary obligations and responsibilities.
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Decedent
A decedent is a term or a deceased person. Tax accountants, lawyers, and estate planners are generally who use this term.
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