Browse Proptionary encyclopedia

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Party that holds property on behalf of another. Party that is required to do certain acts in return for payment.


Property ownership can be held in a trust. Trusts are commonly used by individuals who do not want their name to be associated with owning the property or for the purpose of designating property in a will. In a trust, the owner of the property is referred to as a trustor and the party managing the trust is called the trustee. The trustee’s job is to follow the instructions of the trustor and work on behalf of the beneficiary. The beneficiary is the party who is entitled to the property. When a trustor transfers property to a trustee, he or she is then transferring the bundle of rights, thereby surrendering ownership benefits.

Properties may be held in a trust for the trustor to avoid taxes and or to designate where the property will go after the trustor’s death. Although the trustee is granted title to the property, the trustee must act in good faith. The trustee’s responsibilities include:

Upholding prescribed fiduciary duties to the trustor and their beneficiaries

Defending the trust

Acting impartially among individuals and beneficiaries

Being loyal

Not delegating tasks or profiting aside from agreed upon trustee fees

Trustees are compensated for their time, including reasonable expenses and fees. If the trustee acts in a self serving manner, the court may reverse the actions of the trustee. Trustees can be individuals, public servants, or an employee of a company.

Property in the trust is known as trust property. In the event the trustor does not indicate the role of the trustee or provide them directions prior to the trustee’s death, California law will determine the direction of the trust. The reason many people utilize a trust is to distribute assets to the proper heirs in a timely manner.

If the individual does not create a will, assets will be distributed through probate court which can take a significant amount of time. To avoid this, many individuals create a trust so that assets can be distributed within a short period of time. Additionally, creating a trust helps the beneficiaries of the deceased individual avoid paying legal and court fees associated with the probate process.

For the trustee to carry out the instructions and wishes of the beneficiaries, the trustee must understand each component of the trust to achieve the goal of the trust. This will ensure the proper distribution of assets, which is the main responsibility of the trustee.

Because the process of distributing assets to the proper beneficiaries is very time-consuming, the trustee must continually update beneficiaries to keep them aware of the status of the transaction, which includes trust records including accounts and tax returns.

Trustees and Management of Loan Note and Foreclosure

Trustees manage the foreclosure process and enforce lenders rights to collect on defaulted debt. Should the property owner fall behind on payments, the trustee is responsible for implementing the foreclosure process. Foreclosures of trust deeds are subject to nonjudicial foreclosure, which simply means the foreclosure process is under the supervision of the court. This results in faster foreclosure proceedings and significant savings for the bank.

In a typical example of property purchases, most homeowners obtain mortgages to buy properties. In this common scenario, the mortgage borrower is the grantor of the trust deed. The trustee is the one who has rights to title until the debt is paid in full. In other words, homeownership is not truly valid until the debt is paid off. If the property’s debt is not paid back, resulting in default, the holder of the mortgage can sell the property, assuming the consummation of the foreclosure process.