Trust administration involves overseeing assets in a legal ownership form called a trust. The trustee ensures assets are distributed according to the creator’s wishes, with limited rights given to beneficiaries. The trustee has a fiduciary duty to protect assets and interests of beneficiaries.
Trust administration involves overseeing the assets held within a trust. A trust is a form of legal ownership in which a share of the property is divided into real or personal property. Trusts are commonly created as an estate planning tool and the trustee then oversees the distribution of assets within the trust according to the wishes of its creator.
There are many different aspects to owning a property. Mainly, ownership of property involves the right of possession, the right of use, the right to transfer or sell the property, and the right to will the property to heirs in case of death. When a trust is created, ownership of the property is vested in the trust, which is a legal creation. The trust beneficiary is then vested with limited rights under the terms of the trust; the beneficiary may have the right to use the items within the trust but not to sell or transfer them or may have limited use rights and restrictions on what he can do with the assets held in the trust.
When a trust is created, in addition to appointing the beneficiary or the person who has the right to use the trust assets, a trustee must also be appointed. That trustee is responsible for administering the trust. This means that he is responsible for protecting the assets in the trust and ensuring that they are used according to the wishes of the individual who set up the trust.
The duties involved in trust administration vary according to the nature of the trust being created. It is common, for example, for a person to set up a trust where money is left with a child and then distributed to that child to pay for educational expenses or when the child reaches a certain milestone. In such a situation, the duties of the trustee involve ensuring that the assets are protected until the child reaches maturity and/or using the money in the trust only for qualifying educational expenses.
The trustee has a fiduciary duty when performing the trusteeship. This means that he has the highest obligation to protect the assets in the trust and interests of the beneficiaries. He may not divert assets from the trust in his name, put the assets at risk in any way or otherwise behave in a way that interferes with the purpose of the trust as determined by the creator of the trust.
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