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Trustee

A trustee holds or controls property for a trust and manages it under the trust's terms and applicable law.

Meaning of trustee

The Hague Trusts Convention describes a trustee as the person who controls trust assets and has duties to manage, use, or dispose of them for beneficiaries or a stated purpose. The trustee is accountable for carrying out those duties under the trust terms and law.[1]

The Convention also connects the role with legal title. Trust assets may stand in the trustee's name, or another person's name on the trustee's behalf, while remaining a distinct trust fund. The settlor creates the arrangement, and a beneficiary receives or may receive its benefit. A trustee may also have beneficiary rights without that fact alone conflicting with the existence of a trust.[1]

Duties and authority

The governing law and trust terms shape a trustee's authority and responsibilities. The Convention lists appointment, resignation, and removal, the ability to delegate powers, investment authority, dealings with beneficiaries, and the duty to account among matters governed by the applicable law.[1]

The Jersey statute gives examples of duties for trustees under that law. It requires accurate accounts and records and separation of trust property from the trustee's personal property. Where there is more than one trustee, the default rule is that all join in performing the trust, subject to the trust's terms, which may provide otherwise.[3]

These statutory details are jurisdiction-specific. The Hague Convention identifies governing-law rules for administration, while the Jersey statute supplies rules for trusts under its scope. The applicable terms and law therefore matter to the particular trustee's powers and duties.[1]

How U.S. tax rules use the term

The IRS regulation uses trustee as part of its description of an ordinary trust under the Internal Revenue Code. It describes trustees taking title to property to conserve it for beneficiaries who do not share responsibility for managing it. A document's use of the trust form alone does not settle federal tax classification.[2]

The regulation distinguishes that arrangement from certain business or commercial trusts. If an organization is more properly classified as a business entity under the regulation, conveying property title to trustees for beneficiaries does not change its character for federal tax purposes. The distinction concerns classification under the Code, not a universal definition of trustee.[2]

How these terms relate

A settlor places assets under a trustee's control, and a beneficiary is the person for whose benefit the trust is arranged or who may benefit under its terms. The IRS regulation also refers to a grantor in a specific tax context. For an environmental remediation trust, the trustee provides each grantor a statement of items attributed to the grantor's portion.[1][2]

Key points

Under the Jersey rule, if a trust has multiple trustees, they join in performing it unless its terms provide otherwise.[3]

Related reading

Trust explains the trust relationship. Trust instrument covers the document and terms that describe a trustee's role. Trust property explains the property held in the arrangement. Beneficiary covers the person or class for whose benefit the trustee holds property.

Questions and answers

Does a trustee always hold title to trust assets?

The Hague Convention describes title as standing in the trustee's name or in another person's name on the trustee's behalf. It also describes the trustee as managing, using, or disposing of assets under the trust terms and legal duties.[1]

Can a trustee also be a beneficiary?

The Convention says a trustee may have rights as a beneficiary without that fact alone conflicting with the existence of a trust. The settlor and beneficiary remain separate terms for the person creating the arrangement and the person who may benefit.[1]

What does the IRS regulation mean by trustee?

The regulation describes trustees taking title to property to conserve it for beneficiaries in an ordinary trust arrangement. It also explains that some arrangements using trustees may instead be classified as business entities for Internal Revenue Code purposes.[2]

What duties can apply when there is more than one trustee?

Under the Jersey statute, co-trustees generally join in performing the trust, subject to its terms.[3]

  • Trust: The Hague Convention describes a trust as a relationship in which a settlor places assets under a trustee's control for beneficiaries or a specified purpose.
  • Beneficiary: The Jersey trust law describes a beneficiary by entitlement or by a discretionary possibility of receiving trust property. The definition covers both forms.
  • Settlor: A settlor is associated with creating a trust or placing property into it.
Sources and data notes
  1. HCCH, 1985 Hague Trusts Convention. https://www.hcch.net/en/instruments/conventions/full-text/?cid=59. Retrieved .
  2. Internal Revenue Service, 26 CFR 301.7701-4. https://www.ecfr.gov/current/title-26/section-301.7701-4. Retrieved .
  3. Jersey Legal Information Board, Trusts (Jersey) Law 1984. https://jerseylaw.je/laws/current/l_11_1984. Retrieved .
  4. Cayman Islands Legislature, Trusts Act (2021 Revision). https://legislation.gov.ky/cms/images/LEGISLATION/PRINCIPAL/1967/1967-0006/1967-0006_2021%20Revision.pdf. Retrieved .
  5. Legislature of Bermuda, Trusts (Special Provisions) Act 1989. https://bermuda.fm/legislation/1591. Retrieved .

Dates in this block record when each source was read for this page.