What is the difference between a trust and a trustee?
What is the difference between a trust and a trustee?
A trust is a legal arrangement that lets you control how your money and property are used after you die. It refers to what's being managed—the property and obligations established by the grantor (the person who creates the trust). A trust (also known as a fiduciary relationship) is also a formal relationship where one party, the trustee, holds legal title to something of value (usually money or property) for the benefit of another, the beneficiary.
The most common type of trust is called a "living" trust, where you designate yourself as the trustee and name one or more beneficiaries to receive what you leave behind when you die.
You can also set up an irrevocable trust, which operates more like a separate entity. The person who creates an irrevocable trust, called the "grantor," gives up control over what happens to the assets in it, but retains some benefits. Living trusts offer several benefits over traditional wills:
- You get to name who will be responsible for managing your estate after you die—a job often given to an attorney in traditional wills
- You have more flexibility on how your assets are distributed
- Your beneficiaries will have more time to spread out their payments from your estate
While, a trustee is someone who holds and manages the assets in the trust. They are the one who has been given the responsibility to handle another's affairs, or that of an estate. Usually it is a person who has been appointed to this role by the court, but it can also be an individual that has been named in a will. A trustee tends to be a third party, meaning they are not related to either party involved in the case. They are not allowed to be a party in the case, nor are they allowed to have any personal stake in the proceedings.
In certain cases a person can become a trustee due to their knowledge of financial matters or some other expertise needed for the case. It is usually considered unusual for an individual to become their own trustee, as there are obvious conflicts of interest that can arise from such a situation.
They are responsible for managing assets and paying debts out of assets of an estate, along with any other duties given by the court or those appointed by the deceased. The trustee is held accountable for any negligence or misuse of assets, which could mean being sued by heirs if theft or mismanagement of funds takes place after their appointment as trustee.
They may also face legal action from creditors if debts owed by an estate are not paid on time and could even be responsible for any damages.
If you have any questions or in need a Trust Attorney, we have the Best Attorneys in Utah. Please call this law firm for free consultation.
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Disclaimer: This is not legal advice and is simply an answer to a question and that if legal advice is sought to contact a licensed attorney in the appropriate jurisdiction.
