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{{short description|Person holding a position of trust to a beneficiary}}
{{for|other uses of "trustee", "trusty", and related terms|Trustee (disambiguation)}}
{{redirect|Trusteeship}}
{{Globalize|2=Anglosphere |date=September 2024}}
{{Wills, trusts, estates}}
'''Trustee''' (or the holding of a '''trusteeship''') is a [[legal term]] which, in its broadest sense, refers to anyone in a [[position of trust]] and so can refer to any individual who holds property, authority, or a position of trust or responsibility for the benefit of another. A trustee can also be a person who is allowed to do certain tasks but not able to gain income.<ref name="Black's Law 5th">''Black's Law Dictionary, Fifth Edition'' (1979), p. 1357, {{ISBN|0-8299-2041-2}}.</ref> Although in the strictest sense of the term a trustee is the holder of property on behalf of a [[Beneficiary (trust)|beneficiary]],<ref name="Black's Law 5th"/> the more expansive sense encompasses persons who serve, for example, on the [[Board of directors|board of trustees]] of an institution that operates for a charity, for the benefit of the general public, or a person in the local government.

A [[Trust law|trust]] can be set up either to benefit particular persons or for any [[Charitable trust|charitable purposes]] (but not generally for 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]], regardless of whether they are a prospective beneficiary.

==General duties of trustees==<!-- This section is linked from [[Rule in Re Atkinson]]. See [[WP:MOS#Section management]] -->
[[File:Chart of a trust.jpg|thumb|Chart of a trust]]
Trustees<ref>{{cite web|url=http://cyber.law.harvard.edu/trusting/unit5all.html|title=The New Palgrave Dictionary of Economics and the Law, Definition of "fiduciary duties" by Tamar Frankel Vol.2, p.127-128|publisher=Harvard Edu|access-date=2011-09-08|archive-date=2011-09-03|archive-url=https://web.archive.org/web/20110903233220/http://cyber.law.harvard.edu/trusting/unit5all.html|url-status=live}}</ref> have certain duties (some of which are [[fiduciary]]). These include the duty to:

* Carry out the expressed terms of the trust instrument.<ref name="Youyang">{{cite AustLII|HCA|15|2003|litigants=[[Youyang Pty Ltd v Minter Ellison Morris Fletcher]]  |parallelcite=(2003) 212 [[Commonwealth Law Reports|CLR]] 484 |date=3 April 2003 |courtname=auto}}.</ref> Trustees are bound to act in accordance with the terms of the trusts upon which the trustee holds trust property, and not commit a breach of trust by departing from the terms of the trust.<ref name="Breen v Williams">{{cite AustLII|HCA|57|1996|litigants=[[Breen v Williams]] ("Medical Records Access case") |parallelcite=(1996) 186 [[Commonwealth Law Reports|CLR]] 71|date=6 September 1996 |courtname=auto}}.</ref> However, a trustee may act otherwise than in accordance with the terms of the trust if all beneficiaries, being ''sui juris'' and together absolutely entitled, direct the trustee to do so (or so consent). If any question arises as to the constriction of the provisions of the trust, the trustee must approach the court for determination of the question.
* Defend the trust
* Prudently invest trust assets (in [[New South Wales]], this is mandated by the ''Trustee Act 1925'' (NSW)<ref>{{cite Legislation AU|NSW|act|ta1925122|Trustee Act 1925}} ss14, 14A & 14C.</ref>).
* Be impartial among beneficiaries: the trustee must act impartially between individual beneficiaries<ref>{{cite AustLII|VicLawRp|70|1948|litigants=Tanti v Carlson |parallelcite=[1948] [[Victorian Law Reports|VLR]] 401 |date=2 April 1948 |courtname=[[Supreme Court of Victoria|Supreme Court]] (Vic)}}.</ref> as well as between different classes of beneficiaries.
* Account for actions and keep beneficiaries informed: these include a duty to inform beneficiaries as to their entitlements under the trust<ref>Hawkesley v May [1956]</ref> and other matters concerning the trust. Trustees do not have priority right to trust documents; it is a personal right and cannot be assigned<ref>Global Custodians v Mesh [2002]</ref> The right to seek disclosure of trust documents is an aspect of the court's inherent jurisdiction to supervise the administration of trusts.<ref>Schmidt v Rosewood Trust [2003]</ref> As trustees as not under a duty to disclose their reasoning in applying a trust power (unless the trust instrument requires otherwise), there is no duty to disclose any documents dealing with the decision making promise.<ref>Tierney v King [1983]</ref> Protection of confidentiality has been described as 'one of the most important limitations on the right to disclose of trust documents'. 'Memoranda or letter of wishes' do not necessarily need to be disclosed to a beneficiary if they are of a number of potential beneficiaries.
* Be loyal
* Not delegate
* Not profit; however, may charge fees for services to the Trust <ref>Case law authority ''Keech v Sanford'' [1726] EWHC Ch J76 [http://www.bailii.org/ew/cases/EWHC/Ch/1726/J76.html] {{webarchive|url=https://web.archive.org/web/20150512165432/http://www.bailii.org/ew/cases/EWHC/Ch/1726/J76.html|date=2015-05-12}}</ref>
* Not be in a conflict of interest position
* Administer in the best interest of the beneficiaries
The modern interpretation of fiduciary duty requires the consideration of environmental, social, and governance (ESG) factors as these are long-term investment value drivers.<ref>PRI, UNEP FI, & The Generation Foundation. [https://www.fiduciaryduty21.org/ Fiduciary Duty in the 21st Century] {{webarchive |url=https://web.archive.org/web/20180220151920/https://www.fiduciaryduty21.org/ |date=2018-02-20}}. 2018</ref> When evaluating whether an institutional investor has delivered on its fiduciary duties, both the outcomes achieved and the process followed are of critical importance.

The terms of the instrument that creates the trust may narrow or expand these duties&mdash;but in most instances, they cannot be eliminated. Corporate trustees, typically trust departments at large banks, often have very narrow duties, limited to those the trust indenture explicitly defines.

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 [[claimant]]s, prospective beneficiaries, or third parties. If a trustee incurs a liability (for example, in [[litigation]], for taxes, or under the terms of a lease) in excess of the trust property they hold, then they may find themselves personally liable for the excess.

Trustees are generally held to a "prudent person" standard in regard to meeting their fiduciary responsibilities, though investment, legal, and other professionals can, in some jurisdictions, be held to a higher standard commensurate with their higher expertise.<ref>see: ''Speight v Gaunt'' [1883] EWCA Civ 1 [http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWCA/Civ/1883/1.html] {{webarchive|url=https://web.archive.org/web/20210418195025/http://www.bailii.org/cgi-bin/markup.cgi?doc=%2Few%2Fcases%2FEWCA%2FCiv%2F1883%2F1.html|date=2021-04-18}}</ref>-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 lawyers 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 an exception to the duties outlined above, [[sabbatical officer]]s of [[students' union]]s who are also trustees of these organisations they work for do have the right to a salary (and hence profit from their being a trustee). This is an exception explicitly granted in the 1993 act<ref>{{cite web |title=CC3 – The Essential Trustee: What you need to know |url=http://www.charity-commission.gov.uk/Publications/cc3.aspx#f2 |publisher=Charity-commission.gov.uk |date=2008-04-01 |access-date=2012-03-05 |archive-date=2012-02-28 |archive-url=https://web.archive.org/web/20120228171609/http://www.charity-commission.gov.uk/Publications/cc3.aspx#f2 |url-status=live}}</ref>

==Other uses==
The most comprehensive sense of the term ''trustee'' applies to someone held to a fiduciary duty similar in some respects to that of a trustee proper. For example, the directors of a bank may be trustees for the [[depositor]]s, directors of a [[corporation]] are trustees for the [[stockholder]]s and a guardian is trustee of his ward's property. Many corporations call their governing board a board of trustees, though in those cases they act as a [[board of directors]].

===Charities in the United Kingdom===
In the case of UK [[Charitable trust|charities]], a ''trustee'' is a volunteer who undertakes fiduciary responsibilities on behalf of the charity, subject to the provisions of Charity Law, a branch of trust law, and the [[Charities Act 1993]].<ref>{{UK-LEG|title=Charities Act 1993|path=ukpga/1992/38}}</ref> 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.

The law on this in England changed considerably with the [[Charities Act 2006]].<ref>An account of the main changes can be found in "Charities Act 2006: A guide to the new law" by Michael King and Ann Phillips</ref> One of the key changes made was the creation of [[Charitable Incorporated Organisation]]s (CIOs), which are basically charities with [[limited liability]]. There are thus now two main aspects of corporate management of charities:
*One is the traditional way in which a corporation is a corporate trustee of a given charity.
*The second is the new form, in which the charity itself is incorporated as a CIO.{{clarify|date=June 2019}}
The advantages and disadvantages of the different methods are a complicated matter. According to King and Phillips, many of the advantages of incorporating as a CIO are obtained if the trustees are not individuals but a corporate entity.<ref>King, M., and Phillips, A. (2007), [https://www.wildy.com/isbn/9781853289132/charities-act-2006-a-guide-to-the-new-law-paperback-law-society-publishing Charities Act 2006: A Guide to the New Law].{{pn|date=May 2025}} ([[out of print]])</ref>

===Local government in the United States===
Depending on the state, a trustee is a member of the ''village board of trustees'', which is a village's elected [[legislative body]] as outlined by local or state law. It can be composed of the [[mayor]] and a set number of trustees and usually manages village property, finances, safety, health, comfort, and general welfare and leadership of the town (acting as a board of police or fire commissioners or a moderate income housing board, for example). ''Village board of trustees'' is comparable to but distinguished from [[city council]] or [[town council]]. Small villages have a trustee instead of a mayor, who is elected to manage village business in a similar function.

In some states, a [[civil township]] may be administered by a trustee or a group of trustees; see [[Indiana Township Trustee]] for an example.

==Bankruptcy trustee==
In the United States, when a consumer or business files for bankruptcy all property belonging to the filer becomes property of a newly created entity, the "[[Estate (law)#Bankruptcy|bankruptcy estate]]". (See 11 U.S.C. § 541.) For all bankruptcies (consumer or business) filed under [[Chapter 7, Title 11, United States Code|Chapter 7]], [[Chapter 12, Title 11, United States Code|12]] or [[Chapter 13, Title 11, United States Code|13]] of [[Title 11 of the United States Code]] (the Bankruptcy Code), a trustee (the "[[trustee in bankruptcy]]" or TIB) is appointed by the [[United States Trustee]], an officer of the Department of Justice that is charged with ensuring the integrity of the bankruptcy system and with representatives in each court, to manage the property of the bankruptcy estate, including bringing actions to avoid pre-bankruptcy transfers of property. In bankruptcies filed under [[Chapter 11, Title 11, United States Code|Chapter 11]], the [[debtor]] continues to manage the property of the bankruptcy estate, as "[[debtor in possession]]", subject to replacement for cause with a trustee.

Chapter 7 trustees in bankruptcy are chosen by the United States Trustee from a panel, and are known as panel trustees.  Every judicial district has a permanent Chapter 13 trustee, known as a "standing trustee". As cases under Chapter 12 (for family farmers or fishermen) are filed fairly infrequently, the United States Trustee usually makes trustee appointments in such cases on an ad hoc basis.

==UK legislation==
Relevant legislation includes:
*[[Trustee Act 1925]]
*[http://www.legislation.gov.uk/ukpga/1993/10 Charities Act 1993] (repealed by the [[Charities Act 2011]])
*[[Trusts of Land and Appointment of Trustees Act 1996]]
*''[http://www.legislation.gov.uk/ukpga/1999/15/contents Trustee Delegation Act 1999]'' specifically covers matters to do with [[real property|land]].
*[[Trustee Act 2000]]
*[[Charities Act 2011]]

==United Nations==
{{further|United Nations Trusteeship Council}}

==See also==
{{Wiktionary|trustee}}
* [[Trustee model of representation]]
* [[Fiduciary]]

==References==
{{Reflist}}

==Further reading==
*Fontaine, C. [[Juris Doctor|JD]], [[Master of Laws|LLM]], [[Chartered Life Underwriter|CLU]], ChFC (2004) ''Fundamentals of Estate Planning''. The American College Press.
*Consilium Asset Management (2024), [http://www.consilium-ifa.co.uk/Trustee-Investments/trustee-act-2000.html What did the Trustee Act 2000 do?]
*Charity Commission for England and Wales, [https://www.gov.uk/government/publications/the-essential-trustee-what-you-need-to-know-cc3/the-essential-trustee-what-you-need-to-know-what-you-need-to-do The essential trustee: what you need to know, what you need to do], updated May 2018. Note that the charity regulators in Scotland and Northern Ireland have their own guidance for trustees.

{{Authority control}}

[[Category:Corporate governance]]
[[Category:Equity (law)]]
[[Category:Wills and trusts]]
[[Category:Legal professions]]
[[Category:Trustees| ]]