Trustor vs. Trustee — What's the Difference?
Edited by Tayyaba Rehman — By Urooj Arif — Updated on April 2, 2024
A trustor initiates the trust by transferring assets, whereas a trustee manages those assets for the benefit of the beneficiaries.
Difference Between Trustor and Trustee
Table of Contents
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Key Differences
The trustor, also known as the settlor or grantor, is the person who creates a trust by placing assets into it. They decide the trust's terms, including who the beneficiaries are and how the assets are to be managed and distributed. On the other hand, the trustee is appointed by the trustor to manage the trust's assets according to the trust's terms and for the benefit of the beneficiaries.
The trustor's role is primarily at the inception of the trust, making critical decisions regarding the trust's structure, beneficiaries, and the appointment of trustees. Trustees, however, have ongoing responsibilities, including managing, investing, and distributing the trust's assets in accordance with the trustor's wishes as outlined in the trust agreement.
Trustors have the flexibility to establish various types of trusts, such as revocable or irrevocable trusts, each serving different estate planning objectives. Trustees, regardless of the type of trust, must adhere to a fiduciary duty, ensuring that their actions are in the best interest of the beneficiaries and in alignment with the trust's terms.
The relationship between a trustor and trustee is based on trust and confidence, with the trustor entrusting the trustee with significant responsibility and control over their assets. Trustees must maintain transparency, keep accurate records, and communicate regularly with the beneficiaries about the trust's administration.
The distinction between a trustor and trustee highlights the dynamic within a trust: the trustor provides the vision and framework, while the trustee executes the day-to-day management and legal responsibilities required to fulfill the trustor's intent.
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Comparison Chart
Role
Creates the trust and transfers assets
Manages and administers the trust assets
Responsibilities
Decides the terms of the trust
Carries out the terms of the trust
Position
Initiator of the trust agreement
Executor of the trust agreement
Authority
Has authority at the inception of the trust
Has authority in the ongoing management of the trust
Focus
Establishment and purpose of the trust
Day-to-day management and benefit of the beneficiaries
Compare with Definitions
Trustor
The originator of a trust agreement.
The trustor appointed her brother as the trustee of her estate.
Trustee
The legal entity with fiduciary responsibilities in a trust.
As trustee, she had to provide annual financial reports to the beneficiaries.
Trustor
Someone who places their assets in trust for the benefit of another.
The trustor transferred several properties into the trust for his heirs.
Trustee
The administrator of a trust's affairs.
The trustee worked closely with financial advisors to manage the trust's portfolio.
Trustor
The individual who creates a trust by transferring assets into it.
The trustor decided to establish a trust for her children's education.
Trustee
The executor of the trust terms.
The trustee distributed the income from the trust according to the trustor's instructions.
Trustor
A person who establishes the terms of a trust.
As a trustor, he specified that the trust income should support environmental causes.
Trustee
A fiduciary designated to act on behalf of the beneficiaries.
The trustee ensured the trust's assets were protected for future generations.
Trustor
The grantor of a trust.
The trustor worked with an attorney to draft a comprehensive trust document.
Trustee
An individual or organization appointed to manage trust assets.
The trustee was responsible for investing the trust's assets wisely.
Trustor
(law) A person who creates a trust.
Trustee
Trustee (or the holding of a trusteeship) is a legal term which, in its broadest sense, is a synonym for anyone in a position of trust and so can refer to any person who holds property, authority, or a position of trust or responsibility to transfer the title of ownership to the person named as the new owner, in a trust instrument, called a beneficiary. A trustee can also refer to a person who is allowed to do certain tasks but not able to gain income, although that is untrue.
Trustee
(Law) The person in a trust relationship who holds title to property for the benefit of another.
Trustee
A member of a board elected or appointed to direct the funds and policy of an institution.
Trustee
A country responsible for supervising a trust territory. See Usage Note at -ee1.
Trustee
To place (property) in the care of a trustee.
Trustee
To function or serve as a trustee.
Trustee
A person to whom property is legally committed in trust, to be applied either for the benefit of specified individuals, or for public uses; one who is intrusted with property for the benefit of another.
Trustee
A person in whose hands the effects of another are attached in a trustee process.
Trustee
(transitive) To commit (property) to the care of a trustee.
To trustee an estate
Trustee
(transitive) To attach (a debtor's wages, credits, or property in the hands of a third person) in the interest of the creditor.
Trustee
A person to whom property is legally committed in trust, to be applied either for the benefit of specified individuals, or for public uses; one who is intrusted with property for the benefit of another; also, a person in whose hands the effects of another are attached in a trustee process.
Trustee
To commit (property) to the care of a trustee; as, to trustee an estate.
Trustee
To attach (a debtor's wages, credits, or property in the hands of a third person) in the interest of the creditor.
Trustee
A person (or institution) to whom legal title to property is entrusted to use for another's benefit
Trustee
Members of a governing board
Common Curiosities
Can a trustor also be a trustee?
Yes, a trustor can also serve as a trustee, managing the trust assets themselves, especially in revocable trusts.
Who is a trustee?
A trustee is an individual or institution appointed to manage and administer the assets of a trust according to the trust agreement for the beneficiaries' benefit.
How does a trustor establish a trust?
A trustor establishes a trust by executing a legal document called a trust agreement, transferring assets into the trust, and specifying the trust's terms, trustees, and beneficiaries.
What happens if a trustee fails in their duties?
If a trustee fails in their duties, they can be held legally accountable for breaches of fiduciary duty, which may result in removal or financial restitution.
What responsibilities do trustees have?
Trustees have the responsibility to manage the trust's assets prudently, adhere to the trust terms, and act in the best interests of the beneficiaries.
Can a trustor change the terms of a trust?
If the trust is revocable, the trustor can change the terms of the trust. If it's irrevocable, the terms are generally fixed unless provided otherwise in the agreement.
What is a trustor?
A trustor is an individual who creates a trust by placing assets under the management of a trustee for the benefit of designated beneficiaries.
What is fiduciary duty?
Fiduciary duty is the legal obligation of a trustee to act in the best interest of the trust's beneficiaries, managing the trust assets responsibly and ethically.
Why might someone establish a trust?
Trusts are established for various reasons, including estate planning, asset protection, tax planning, and providing for beneficiaries with specific needs.
Is a trustee compensated?
Trustees may be compensated for their services according to the terms of the trust agreement or applicable laws.
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Written by
Urooj ArifUrooj is a skilled content writer at Ask Difference, known for her exceptional ability to simplify complex topics into engaging and informative content. With a passion for research and a flair for clear, concise writing, she consistently delivers articles that resonate with our diverse audience.
Edited by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
