Trustee 506701 223348644 2008-07-03T18:09:17Z JonathanFreed 255473 /* General duties of trustees */ wiki-link fiduciary {{globalize/USA}} '''Trustee''' is a [[legal term]] that refers to a holder of property on behalf of a [[beneficiary (trust)|beneficiary]]. A [[Trust law|trust]] can be set up either to benefit particular persons, or for any [[Charitable trust|charitable purposes]] (but not generally for [[Purpose trust|non-charitable purposes]]): typical examples are a [[testamentary trust|will trust]] for the [[testator]]'s children and family, a [[pension]] trust (to confer benefits on employees and their families), and a charitable trust. In all cases, the trustee may be a person or [[company]], whether or not they are a prospective beneficiary. ==General duties of trustees==<!-- This section is linked from [[Rule in Re Atkinson]]. See [[WP:MOS#Section management]] --> In virtually every common law jurisdiction, trustees have certain duties (some of which are [[fiduciary]]). These include the duty to carry out the express terms of the trust instrument, the duty to defend the trust, the duty to prudently invest trust assets, the duty of impartiality among the beneficiaries, the duty to account for their actions and to keep the beneficiaries informed about the trust, the duty of loyalty, the duty not to delegate, the duty not to profit, the duty not to be in a conflict of interest position and the duty to administer the trust in the best interest of the beneficiaries. These duties may be expanded or narrowed by the terms of the instrument creating the trust, but in most instances cannot be eliminated completely. Benjamin Cardozo once described the standard for fiduciary behavior this way: "Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior." ''Meinhard v. Salmon'', 249 N.Y. 458, 164 N.E. 545 (1928). ==Necessary traits of trustees== The responsibilities of a trustee can be onerous, although honest trustees are normally indemnified out of the trust assets. A trustee carries the [[fiduciary]] responsibility and [[liability]] to use the trust assets according to the provisions of the [[trust instrument]] (and often regardless of their own or the beneficiaries' wishes). The trustee may find himself liable to claimants, prospective beneficiaries, or third parties. In the event that a trustee incurs a liability (for example, in [[litigation]], or for [[tax]]es, or under the terms of a [[lease]]) in excess of the trust property they hold, they may find themselves personally liable for the excess. Thus, at least in theory, a member of a small charity committee could unwittingly risk their family assets. Trustees are generally held to a "prudent person" standard in regard to meeting their fiduciary responsibilities, though investment, legal, and other professionals can be held to a higher standard commensurate with their higher expertise. Trustees can be paid for their time and trouble in performing their duties only if the trust specifically provides for payment. It is common for [[lawyer]]s to draft will trusts so as to permit such payment, and to take office accordingly: this may be an unnecessary expense for small estates. In the case of charitable or other trust corporations, the company itself is a trustee and the term "Trustee Board" is frequently used of the [[board of directors]]. The company holds the trust property and liabilities separately from the individual trustee-directors, and confers limited liability on them. The members of the board are generally known as trustees, although they remain liable as directors under company law, and as directors are naturally responsible for their acts and omissions in directing the charity. For practical purposes, the members of the board perform the duties of trustees, but the powers of the charity are delegated and exercised subject to the charity's procedural articles or regulations. ==Other uses== Many other corporations call their governing boards a board of trustees, though in those cases, they act as a [[board of directors]]. To some extent, the [[fiduciary|fiduciary duties]] of a director to the [[company (law)|company]] are comparable with those of a trustee. In the case of UK [[charitable trust|charities]], a ''trustee'' is an unpaid volunteer who undertakes fiduciary responsibilities on behalf of the charity, subject to the provisions of Charity Law, a branch of trust law, and the ''[http://www.hmso.gov.uk/acts/acts1993/Ukpga_19930010_en_1.htm Charities Act 1993]''. For charity trustees, the [[Charity Commission]] of England and Wales, [[Office of the Scottish Charity Regulator]] of Scotland and [[Voluntary Activity Unit]] of Northern Ireland often has concurrent jurisdiction with the Courts. Many UK charities are also [[Limited company|limited liability companies]] registered with [[Companies House]], in this case the trustees are also Directors of the company and their liability is limited. This is the preferred model if the charity owns property or employs people. '''Trustee''' is also a term used for a prison inmate who has special work-related privileges, usually as a result of good behavior. ==Bankruptcy Trustee== In the United States, if a person is adjudged a bankrupt, a trustee will be appointed to hold legal title to the property of the debtor and to perform other duties required by the bankruptcy laws. See [[United States Trustee]] for additional information about trustees in US bankruptcy law. ==UK legislation== :''[http://www.hmso.gov.uk/acts/acts1999/19990015.htm Trustee Delegation Act 1999]'' specifically covers matters to do with [[real property|land]]. :''Trustee Act 1925'' :''[http://www.hmso.gov.uk/acts/acts1996/1996047.htm#aofs Trusts of Land and Appointment of Trustees Act 1996]'' :''[http://www.hmso.gov.uk/acts/acts2000/20000029.htm#aofs Trustee Act 2000]'' :''[http://www.hmso.gov.uk/acts/acts1993/Ukpga_19930010_en_1.htm Charities Act 1993]'' ==See also== {{Wiktionarypar|trustee}} * [[Trustee model of representation]] * [[Trusty system]] ==References== *Fontaine, C. [[Juris Doctor|JD]], [[Master of Laws|LLM]], [[CLU]], [[ChFC]] (2004) ''Fundamentals of Estate Planning''. The American College Press [[Category:Management]] [[Category:Corporate governance]] [[Category:Equity]] [[Category:Wills and trusts]] [[Category:Legal occupations]]