Trustee

Definition

A Trustee is a person or entity appointed to hold and administer the assets of a trust for the benefit of the beneficiaries, in accordance with the terms of the trust deed and relevant law. The trustee has a fiduciary duty - a legal obligation to act in the best interests of the beneficiaries.

Why it matters

Trustees are central to the functioning of a trust. They must manage the trust property prudently, act impartially between beneficiaries, and comply with the settlor’s instructions as set out in the trust instrument.

In the UK, trustee duties are governed by the Trustee Act 2000 and other legislation, as well as the trust deed itself.

How trustees operate

1. Appointment – Named in the trust deed or appointed later in accordance with its provisions.
2. Asset management – Safeguard and invest trust property with due care and skill.
3. Decision-making – Distribute income or capital to beneficiaries as permitted by the trust terms.
4. Record-keeping – Maintain accurate accounts, records, and compliance filings.
5. Accountability – Report to beneficiaries and, where applicable, to regulators or tax authorities.

Examples and use cases

• Family trusts – Managing property, investments, or cash for multiple generations.
• Charitable trusts – Overseeing funds for philanthropic purposes.
• Will trusts – Administering assets for beneficiaries after the settlor’s death.
• Corporate trusts – Holding security for bondholders or lenders.

Mini-FAQ

Q: Can a trustee also be a beneficiary?
A: Yes, but they must act impartially and cannot prioritise their own interests over other beneficiaries.

Q: Can a trustee be paid?
A: Professional trustees are usually paid; lay trustees may be reimbursed for expenses but not remunerated unless the trust deed allows it.