Home > Trust Basics > What are Trustees and Beneficiaries?

What are Trustees and Beneficiaries?

By: J.A.J Aaronson - Updated: 17 Nov 2017 | comments*Discuss
 
Trust Law Settlor Trustee Beneficiary

In basic terms, a trust is a legal agreement by which assets are transferred from one individual, known as the settlor, to the trust itself. The responsibility for the management of these assets is assumed by the trustees, who run the trust for the benefit of a third party known as the beneficiaries.

The role of the settlor is covered in detail in an article elsewhere in this section. But what are trustees and beneficiaries?

Trustees

Trustees have the most significant role to play in the actual running of the trust. They do not actually own the assets that are placed in trust; these remain the property of the trust itself until they are ultimately transferred to the beneficiary. However, the trustees are charged with ensuring that the assets are managed in such a way as to ensure that the maximum benefit is derived by the beneficiaries. This might be achieved through investment, or simply ensuring that the assets are kept safe.

In many cases, the acceptable treatment of the assets by the trustees will be clearly defined by the settlor when constituting the trust. In these circumstances, the trustees will be able to act only within the bounds of the instructions given by the settlor. In some circumstances, however (most notably in the case of discretionary trusts, which are covered in more detail elsewhere on this site), the trustees will have significant freedom in deciding how the assets are managed.

Beneficiaries

Beneficiaries have few, if any, obligations as a result of their involvement with the trust. In most cases the beneficiary will be specifically defined in the trust instrument; that is, the document through which the trust is established. Occasionally, however, the settlor will have outlined a ‘class’ of beneficiary, rather than a specific individual. In these cases the trustees will be required to decide precisely who will benefit from the trust. It should also be noted that the beneficiary need not be a person; frequently, particularly in the case of testamentary trusts, the settlor’s appointed beneficiary is in fact a charitable organisation.

Relationship with Settlor

It is important to remember that there is no legal necessity for the settlor, trustee and beneficiary to be different people or organisations. It is sometimes beneficial for an individual to establish a trust in which they are also the trustee and beneficiary; this is perfectly possible in English law. This can be particularly useful for tax purposes.

It is also possible for the settlor to become one of several trustees – that is, to appoint him or herself, along with others. This can offer peace of mind for all parties involved, as it means that other individuals are capable of handling the affairs of the trust in the event that the settlor dies or becomes incapacitated.

By agreeing to their position, trustees take on a number of serious responsibilities. Furthermore, there are some prerequisites that must be met in order for an individual to be suitable for the position. These responsibilities and requirements are looked at in more detail in an article elsewhere in this section.

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I need some advice please.Me and my husband made a will.I am the beneficiary.He put his brother as an executor and his daughter asa guardian and trustees on his first marriage.My question is I don’t get on with his brother coz he created problems before while we live together with his family and I don’t communicate with him. 1. Is it possible that the executor and trustees can steal the money and put it in there own bank account secretly ? As abeneficiary with a child age below (18) 2. What’s the best thing for me to do to protect the assets of my husband ? 3. Is it okay to have 2 executor and trustees? I really need a peaceful mind about this coz my husband didn’t explain to me before doing this.If I ask him again and gets angry.
Anie - 17-Nov-17 @ 4:27 PM
My friend( N) father has set up a trust for her children( B).The trustees are her parents( Y). Can the beneficiaries use themoney in the trust?If not, when can they use the trust fund?.If they can use the trust fund, does it need to be paid back?
N1nkx - 9-Nov-17 @ 3:30 PM
:) I am a trustee and beneficiary of my fathers house with my 2 brothers. Since the trust was set up my 2 brothers have stopped talking to me. Initially they rented out my fathers out to a family member and the reduced rate rent was to go towards my fathers care. I was not privvy to this nor was my objections to reduced rate rent listened to. About 10 months ago my father died. The tenant wasstill in the house and I presume should have still been paying rent (as I did not agree to this stopping) however, as a beneficiary I have not seen any of this rent money, either before or after my Dad died -( as an aside the paper trail of the rent money going into his account when he was alive stopped after the first 5 months of the relative moving in- because of the vitriole between myself and my brothers i did not pursue this at the time. The relative moved out in September to buy their own property. Yesterday I received a red council tax bill in my name only and after calling the tax office they said that all trustees would have received this. I do not have the 700 to pay for the council taxand so willing to go to court as I have received nothing from the rental of this property since my Dad died and i have not been consulted about anything regarding the property except to tell me it is up for sale about 3 weeks ago. Can anybody please offer me some advice
QuestonsQuestions - 20-Oct-17 @ 6:29 PM
Myself and 3 siblings are co-executors on our mother's will.One of my siblings is interested in seeking legal action against a 3rd party under the name of the estate.Myself and the other siblings are not interested and have concerns about financial exposure to pay legal costs if the case is not ruled in her favour. Note the estate is quite small.Her legal counsel has told her to have the rest of us renounce our executor title so she would be the sole executor and would be the only one at risk for a counter suit."As beneficiaries we would not be liable for any losses or risks incurred by the executor".Is this really the case?If I do renounce my executor status will I still be responsible for losses or liabilities that could be placed on the estate or executor on behalf of the estate?
DE - 28-Nov-16 @ 7:30 PM
My friend J is the beneficiary of a Trust set up by his late father, by which rent from letting the former family home is paid to him. His sister and her husband are the appointed Trustees. J has learning difficulties and the relationship between J and his sister is unfriendly. Communication between them is by formal notes, and payments to him of rent have always been erratic. Following the departure of an apparently unsatisfactory tenant , the Trustees wrote to J on 10-2-16 to say that there would be no further payments whilst repairs were completed and a new tenant found. He has had no communication since then, and no payment since 5-1-16. At J’s request, I wrote to the Trustees on 16-3-16 recognising their problems, but asking that they let him know soon when and how much he would be paid. Neither of us has heard from them. What rights does J have in this situation to require at least an update on the status of the tenancy?
DJB - 1-Jul-16 @ 8:26 PM
Badger - Your Question:
Basically on my fathers death there was a trust fun for nine children which my mother and myself were trustees my mother lived on the interest until her death but on going to get fund to share between children one of the children managed somehow to take the fund out for himself leaving the rest with nothing how could this be done legally or illegally look forward for a reply

Our Response:
A solicitor who has details of the fund would be best to advise you on this situation as it will probably involve court action.
EstatesOrTrusts - 9-May-16 @ 11:30 AM
Basically on my fathers death there was a trust fun for nine children which my mother and myself were trustees my mother lived on the interest until her death but on going to get fund to share between children one of the children managed somehow to take the fund out for himself leaving the rest with nothing how could this be done legally or illegally look forward for a reply
Badger - 6-May-16 @ 10:34 AM
Ralphie - Your Question:
I ,am a trustee along with four other individuals we as trustees have signed a pledge with our local council to be Trustees of our local allotment association for a term of 25 years ,we have a Chair person appointed by the body of Trustees and a secretary.Recently our chairman has become ill and does not attend meetings and is often unavailable ,we the other Trustees feel that we need to have a person as chair who is active can we appoint a new person, can the chair appoint a person who is not a trustee as chair in his place to chair a meeting of Trustees can the person appointed as chair be other than a Trustee.The local council owns the allotment site and the trustees have a constitution between the council and themselves and there is a committee appointed by the plotholders who care for the site. Could you explain what the Nolan principles are that relate to Trustees ?

Our Response:
You will need to look at the terms/rules of the trust and the pledge that you have signed with the council to establish how a new chairman can be appointed. The Nolan Principles simply relate to the way in which publically appointed people carry out their duties.
EstatesOrTrusts - 11-Sep-15 @ 10:19 AM
I ,am a trustee along with four other individuals we as trustees have signed a pledge with our local council to be Trustees of our local allotment association for a term of 25 years ,we have a Chair person appointed by the body of Trustees and a secretary .Recently our chairman has become ill and does not attend meetings and is often unavailable ,we the other Trustees feel that we need to have a person as chair who is active can we appoint a new person,can the chair appoint a person who is not a trustee as chair in his place to chair a meeting of Trustees can the person appointed as chairbe other than a Trustee .The local council owns the allotment site and the trustees have a constitution between the council and themselves and there is a committee appointed by the plotholders who care for the site . Could you explain what the Nolan principles are that relate to Trustees ?
Ralphie - 10-Sep-15 @ 4:50 AM
Iam a trustee of a club which relies on a large bank overdraft in the latter part of the year. For some, better known to one or two persons, there is a movement to change the club rules, (we are an unincorporated body), and remove the trustees. I don't mind being ousted, but my concern is how will the club borrow money, if there are no trustees? Regards Robin
Buff - 10-Mar-15 @ 6:07 PM
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