The concept of trusts as a whole can be difficult to understand. Before we can answer the question “what is a trustee?”, it is firstly necessary to explore the basic concept of trust structures. Normally, when a person owns property, they own both the legal and beneficial (otherwise known as equitable) right to the property. A trust, on the other hand, divides the legal entitlement and beneficial entitlement of a property. The legal entitlement of the property will be held by a person that is known as the trustee. The beneficial entitlement to the property will be held by a person known as the beneficiary.
Normally, the role and powers of the trustee will be derived from the terms of the trust deed. Generally, it involves the micromanagement and administration of the trust, including dealing with assets, management of trust businesses and the distribution of trust income and profits to the beneficiaries. Trustees also owe a variety of fiduciary and implied duties to their beneficiaries, including:-
- the duty to maintain proper accounts
- the duty to act in good faith
- the duty to carry out duties and powers to the standard of an ordinary prudent business person
- the duty to act impartially
In terms of protecting trust assets, the nominated trustee should ideally be a person with whom the beneficiaries have shared a long term relationship with and can trust. Many Trust Lawyers and Asset Protection Lawyers go further by advising that the trustee be a company, rather than individual. The significance of this is that the trustee will be protected by limited liability in circumstances where the trustee incurs a liability.
For more information, contact our office to speak to a Trust Lawyer or Asset Protection Solicitor. We have branch offices conveniently positioned across the Sydney metropolitan area, including in Baulkham Hills, Bondi Junction, Gordon, North Sydney and Parramatta. For a full list of our office locations, with complete addresses, click on our Locations tab above or contact our main office line on (02) 9233 4048.
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