A trustee is a person (or institution) selected to administer a trust. A trustee’s role is to adhere to the terms of the trust document and fulfill its objectives. A trustee can be an individual (professional or nonprofessional) or a corporate trustee, such as a bank or trust company. As the grantor (the person establishing the trust), you should choose a trustee carefully because an inappropriate choice could invalidate the trust and have serious tax consequences. You must also weigh many other personal, family, business, investment, and nontax concerns. For a large or complicated trust, a combination of individual and corporate trustees may best provide the expertise needed to manage the trust with the flexibility to respond to beneficiaries’ changing needs.
Trust administration is the area of law that defines a trustee’s duties, powers, and liabilities in relation to the beneficiaries. A trustee has specific duties. The scope of a trustee’s powers depends on the extent of those duties. Because the trustee is personally liable for breaches of duty, the extent of a trustee’s duties also determines his or her liability.