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Trustee (or the holding of a trusteeship) is a
legal term {{Short pages monitor Trustees have certain duties (some of which are
fiduciary A fiduciary is a person who holds a legal Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by ...
). These include the duty to: * Carry out the expressed terms of the trust instrument . - A trustee is bound to act in accordance with the terms of the trusts upon which he or she holds trust property, and commits a breach of trust if he or she departs from the terms of the trust.. 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 New South Wales (abbreviated as NSW) is a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (newspape ...
, this is mandated by ''Trustee Act 1925'' (NSW) ). * Be impartial among beneficiaries - the trustee must act impartially between individual beneficiaries 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 and other matters concerning the trust. Trustees do not have priority right to trust documents; it is a personal right and cannot be assigned The right to seek disclosure of trust documents is an aspect of the court's inherent jurisdiction to supervise the administration of trusts. 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. 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 * 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. When evaluating whether or not an institutional investor has delivered on its fiduciary duties, both the outcomes achieved and the process followed are of critical importance. The terms of instrument that creates the trust may narrow or expand these duties—but in most instances they cannot be eliminated completely. 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 A plaintiff ( Π in legal shorthand) is the party who initiates a lawsuit A lawsuit is a proceeding by a party or parties against another in the civil Civil may refer to: *Civic virtue, or civility *Civil action, or lawsuit *Civil affai ...
s, prospective beneficiaries, or third parties. If a trustee incurs a liability (for example, in
litigation A lawsuit is a proceeding by a party or parties against another in the civil Civil may refer to: *Civic virtue, or civility *Civil action, or lawsuit *Civil affairs *Civil and political rights *Civil disobedience *Civil engineering *Civil ...
, or 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.-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 In the United Kingdom a sabbatical officer is a full-time officer elected by the members of a students' union (or similar body such as students' association, Students' Representative Council {{Globalize , date=February 2013 , discuss=Talk:Students ...
s of
students' union A students' union, also known by many other names, is a student organization present in many colleges, universities, and high schools. In higher education, the students' union is often accorded its own building on the campus, dedicated to social, ...
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


Other uses

The broadest 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 A deposit account is a bank account A bank account is a financial account maintained by a bank or other financial institution in which the financial transaction A financial transaction is an Contract, agreement, or communication, carried o ...
s, directors of a
corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal ...

corporation
are trustees for the
stockholder A shareholder (also known as stockholder) is an individual or institution (including a corporation A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity ...
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 A board of directors is a group of people who jointly supervise the activities of an organization An organization, or organisation (Commonwealth English The use of the English language English is a West Germanic languages, W ...
.


Charities in the United Kingdom

In the case of UK
charities A charitable organization or charity is an organization whose primary objectives are philanthropy and social well-being (e.g. educational, religious Religion is a social system, social-cultural system of designated religious behaviour, b ...
, 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 The Charities Act 2011c 25 is a UK Act of Parliament Acts of parliament, sometimes referred to as primary legislation, are texts of law passed by the Legislature, legislative body of a jurisdiction (often a parliament or council). In most countr ...
. For charity trustees, the
Charity Commission , type = Non-ministerial government department Non-ministerial government departments (NMGDs) are a type of Departments of the Government of the United Kingdom, department of the Government of the United Kingdom that deal with matters for whic ...
of England and Wales,
Office of the Scottish Charity Regulator The Scottish Charity Regulator (OSCR) is a non-ministerial department of the Scottish Government with responsibility for the regulation of Charitable organisation, charities in Scotland. OSCR is the independent regulator and registrar for more t ...
of Scotland and Voluntary Activity Unit of Northern Ireland often has concurrent jurisdiction with the courts. Many UK charities are also
limited liability companies A limited liability company (LLC) is the US-specific form of a private limited company A private limited company is any type of business entity in Privately held company, "private" ownership used in many jurisdictions, in contrast to a Pub ...
registered with
Companies House Companies House is the United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain,Usage is mixed. The Guardian' and Telegraph' use Britain as a synonym for the United Ki ...
, 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 of 2006. 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. One of the key changes made was that it introduced the
Charitable Incorporated Organisation A Charitable Incorporated Organisation (CIO) is a corporate form of business designed for (and only available to) charitable organisations in the United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as ...
which is basically a limited liability charity. 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 way, in which the charity itself is incorporated as a CIO. The advantages and disadvantages of the different methods is a complicated matter. According to King and Philips, many of the advantages of incorporating as a CIO are obtained if the trustees are not individuals but a corporate entity.


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 A legislature is an assembly Assembly may refer to: Organisations and meetings * Deliberative assembly A deliberative assembly is a gathering of members (of any kind of collective) who use parliamentary procedure Parliamentary procedure i ...
as outlined by local or state law. It can be composed of the
mayor In many countries, a mayor is the highest-ranking official An official is someone who holds an office (function or , regardless whether it carries an actual with it) in an or government and participates in the exercise of , (either their ow ...

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 A municipal council is the legislature, legislative body of a municipality or local government area. Depending on the location and classification of the municipality it may be known as a city council, town council, town board, community council, ...
or
town council A town council, city council or municipal council is a form of local government for small municipalities A municipality is usually a single administrative division Administrative division, administrative unitArticle 3(1). , country su ...
. 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 A civil township is a widely used unit of local government in the United States that is subordinate to a county (United States), county, most often in the northern and midwestern parts of the country. The term town is used in New England town, Ne ...
may be administered by a trustee or a group of trustees; see Indiana Township Trustee for an example.


Correctional institutions

A "trusty" is a prisoner who is trusted not to attempt an escape, and therefore requires little or no guarding. For example, a trusty may be allowed to leave the prison to attend work or other important events. Occasionally, "trusty" is confused with "trustee".


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 "". (See 11 U.S.C. § 541.) For all bankruptcies (consumer or business) filed under Chapter 7, 12 or 13 of
Title 11 of the United States Code Title 11 of the United States Code, also known as the United States Bankruptcy Code, is the source of Bankruptcy in the United States, bankruptcy law in the United States Code. Chapters Title 11 is subdivided into nine chapters. It used to include ...
(the Bankruptcy Code), a trustee (the "
trustee in bankruptcy A trustee in bankruptcy is an entity, often an individual, in charge of administering a bankruptcy Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of the ...
" or TIB) is appointed by the
United States Trustee The United States Trustee Program is a component of the United States Department of Justice The United States Department of Justice (DOJ), also known as the Justice Department, is a of the government tasked with the enforcement of federal a ...
, 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 Chapter 11 of the United States Bankruptcy Code ( Title 11 of the United States Code The Code of Laws of the United States of America (variously abbreviated to Code of Laws of the United States, United States Code, U.S. Code, U.S.C., or USC) ...
, the
debtor A debtor or debitor is a legal entity (legal person) that owes a debt Debt is an obligation that requires one party, the debtor A debtor or debitor is a legal entity (legal person) that owes a debt Debt is an obligation that ...
continues to manage the property of the bankruptcy estate, as "
debtor in possession A debtor in possession in United States bankruptcy law is a person or corporation who has filed a bankruptcy petition, but remains in possession of property upon which a creditor A creditor or lender is a party (e.g., person, organization, ...
," 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


Trustee Delegation Act 1999
' specifically covers matters to do with
land Land is the solid surface of Earth that is not permanently submerged in water. Most but not all land is situated at elevations above sea level (variable over geologic time frames) and consists mainly of Earth's crust, crustal components such a ...
. :
Trustee Act 1925 Trustee Act 1925c 19 is an Act of Parliament Acts of parliament, sometimes referred to as primary legislation, are texts of law passed by the Legislature, legislative body of a jurisdiction (often a parliament or council). In most countries, acts o ...
:
Trusts of Land and Appointment of Trustees Act 1996The Trusts of Land and Appointment of Trustees Act 1996c 47, usually called "TLATA" or "TOLATA", is an Act of Parliament of the United Kingdom, which altered the law in relation to trusts of land in England, Wales, Scotland and Northern Ireland. Bac ...
:
Trustee Act 2000 The Trustee Act 2000c 29 is an Act of the Parliament of the United Kingdom The Parliament of the United Kingdom is the of the , the and the . It alone possesses and thereby ultimate power over all other political bodies in the UK and ...
:
Charities Act 1993
'


United Nations


See also

*
Trustee model of representation The trustee model of representation is a model of a representative democracy, frequently contrasted with the delegate model of representation.New_Style">NS">New_Style.html"_;"title="/nowiki>New_Style">NS/nowiki>_1729_–_9_July_1797)_was_an_Irish_ ...
*
Fiduciary A fiduciary is a person who holds a legal Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by ...


References


Further sources

*Fontaine, C. JD,
LLM A Master of Laws (M.L. or LL.M.; Latin Latin (, or , ) is a classical language A classical language is a language A language is a structured system of communication Communication (from Latin ''communicare'', meaning "to shar ...
, CLU, ChFC (2004) ''Fundamentals of Estate Planning''. The American College Press
Trustee Act 2000 Summary
{{Authority control Corporate governance Equity (law) Wills and trusts Legal professions