A necessary element of a trust is that it must have a trustee. This article provides an introduction to who can be a trustee, what is a trustee, the types of trustee and how to set up a trustee company. It is intended for people or businesses who are interested in establishing a trust and want more information about how it works.
Who can be a trustee?
Anyone who is able to own property can be a trustee. This includes individuals and companies.
A beneficiary of a trust can also be a trustee, but if there is only one beneficiary of a trust then that beneficiary cannot also be the trustee of that trust.
What does a trustee do?
A trustee is the legal owner of the trust property and is responsible for administrating the trust property for the benefit of the beneficiaries of the trust.
How are trustees appointed?
Trustees can be appointed in one of three ways:
- Trust deed: generally, a trust deed names the person or persons who is/are to act as trustee(s) of the trust. A trust deed will also generally contain a provision which explains how a trustee is to be appointed.
- Statutory power: if there are no specific provisions in the trust instrument for appointing trustees then there are default provisions in legislation within each State and Territory of Australia outlining how the appointment of a trustee is to be made and who can make it.
- Courts: A court can appoint a trustee.
What are the types of trustees?
There are a number of different types of trustee, including:
- Public trustee: The Public Trustee is a statutory authority that undertakes a number of public functions including administering wills, small estates or estates for the mentally incapable and provides trustee, financial management and other specialist services to the public.
- Trustee companies: A trustee company has the role of investing and managing funds on behalf of its clients.
- Bare trustees: A bare trustee is a person who holds trust property for the benefit of another who has legal capacity. A bare trustee has no interest in the property aside from bare legal title and does not have any further duties to perform.
- Custodian trustees: A custodian trustee holds trust property, but the management of the trust property and the exercise of all powers and discretions under the trust shall be and remain vested in the managing trustee, not the custodian trustee.
- Advisory trustees: An advisory trustee does not have property interests vested in it, rather their role is to advise other trustees on the management and administration of trust property.
- Setting up a trustee company
A trustee company needs to be set-up like any other company.
The difference between a company and a company that only acts as a trustee is that a trustee company is the legal, but not beneficial, owner of the assets of the trust. The assets of the company are held on trust for the benefit of the beneficiaries of the trust, not the company in its own right.
To conclude, a trustee is the legal owner of the trust property and is responsible for administrating the trust property for the benefit of the beneficiaries of the trust. There are a number of options in relation to the appointment of a trustee. If you would like more information about establishing a trust or about the appropriate type of trustee for your trust then speak to a specialist trust lawyer at LegalVision.
LegalVision also offers specialist fixed-fee online legal advice from a broad range of top class business lawyers.