Define legal trust

Not sure which one is right for you? The executor of a living trust, normally referred to as the trustee, holds legal title to define legal trust trust assets but is expected to administer these assets for the benefit of the trust beneficiaries rather than himself.

Some of his responsibilities are set by state law, and others are set by the terms of the trust deed. Duty of Care The trustee must manage trust assets with a reasonable degree of care. Although the term “reasonable” is somewhat ambiguous because it is based on the particular facts of each case, in general it means that the trustee must manage trust assets with as much care as a prudent person would exercise when managing his own assets. Duty of Loyalty The duty of loyalty is another legal fiduciary duty that applies to the trustee independently of the terms of the deed of trust. The trustee must act in the best interests of the beneficiaries.

He may not benefit from his administration of the trust, except for any trust administration fees authorized by the trust deed. Trust Administration The trustee must administer the trust in strict accordance with the terms of the deed of trust. A deed of trust may grant the trustee broad or narrow authority, and the trustee must act within these limits — he must distribute assets to beneficiaries on time, for example, and he may not invest trust assets unless he is authorized to do so by the deed of trust. Duty Not to Delegate Authority Although the trustee may assign certain trust administration tasks to other parties such as accountants and lawyers, he remains ultimately responsible for their performance.

If, for example, the trustee hires an incompetent tax lawyer to file trust tax returns, the beneficiaries may hold the trustee financially responsible for the lawyer’s malpractice. What Is a Trustee Appointed For? What Is a Contingent Trust Trustee? A contingent trust, also known as a standby trust, is a trust that does not yet exist but will come into existence if and when a particular event occurs. What Can a Beneficiary Do If the Trustee Refuses to Deal?