Trustor vs. trustee: What’s the difference?

When creating a trust, you may hear a lot of new or confusing terms — including words that seem similar, like “trustor” and “trustee.”

Generally, trustors and trustees each play a unique role in the lifecycle of a trust: a trustor creates the trust, and a trustee is assigned to administer it.

Both trustors and trustees play a part in maintaining the trust according to the instructions laid out in the trust documents. Their duties can overlap if a trustor chooses to manage their own trust.

Understanding what a trust is, which trust type fits your situation, and who these key players are can help shine a light on why trustors and trustees are so important — and what to expect if you step into one of these roles.

What is a trust?

A trust is a legal arrangement that the trustor sets up to hold — or “own” — their assets. These assets can include real estate property, vehicles, financial accounts, digital assets, and more. In estate planning, trustors use trusts to pass on their assets without those assets having to go through probate.

Unlike a last will and testament, a trust can offer more privacy and create a smoother transition of assets from one person to another. This makes them a great option for those who want more control over how their assets are handled after they die.

There are several different types of trusts, and your unique situation and needs will help determine which is the best option for you and your loved ones.

What is a trustor?

A trustor is the person or entity who creates a trust. Trustors can be a single person, more than one person (commonly spouses or domestic partners), or an organization. In some states, trustors are called “grantors” or “settlors.”

In most cases, the trustor will set up the trust and fill it with assets (this is called “funding the trust”). They’ll also choose beneficiaries (the people or organizations who should receive the trust assets), set the trust’s guidelines, and name trustees and successor trustees. All of this information is put into a document called a trust agreement or “declaration of trust.”

Trustor duties

A trustor has many duties when creating a trust, including:

• Appointing a trustee: Depending on the type of trust they create, the trustor can nominate someone to oversee the trust, or they can choose to be trustee themselves. If they opt to be trustee, they’ll need to appoint a successor trustee to administer the trust in the event they become incapacitated (meaning they can’t care for themselves) or pass away.
  
  
• Determining the terms of the trust: When creating the trust, the trustor can also decide on its terms and parameters. This includes choosing which assets will fund the trust and deciding who should receive those assets, and when (for example, when a beneficiary reaches a set age or hits a major life milestone).
  
  
• Designating beneficiaries: The trustor should decide who will receive each asset in the trust. These beneficiaries can be family members, friends, or even nonprofit organizations.
  
  
• Allocating assets: In addition to choosing who should benefit from the trust, the trustor can also decide what each beneficiary receives, as well as how any other assets are handled or distributed. For example, perhaps the trustor wants a piece of real estate property sold after they pass away to pay for a beneficiary’s college tuition, or wants specific pieces of their jewelry collection distributed to particular grandchildren.

What is a trustee?

While a trustor creates a trust, a trustee is responsible for managing it.

A trustee can be a person, multiple people, or an entity or organization. They can even be one of the trust’s beneficiaries (or in some cases, the trustor themselves). The trustor determines who the trustee is and what their duties are, and puts that information in the declaration of trust.

The type of trust created and the terms outlined in the trust documents will determine when a trustee’s duties begin and end. They may step into the role as soon as they’re appointed, or they might not assume responsibility for the trust until after a particular event, such as the trustor’s death.

Trustee duties

A trustee’s job is to follow the trustor’s wishes and manage the trust as instructed in the declaration of trust.  

When trustees accept their role, they also assume fiduciary responsibility for the trust. This means it’s their legal duty to act in the best interest of the trust’s beneficiaries. They can be held legally responsible or removed from the role for not living up to that standard.

Depending on the type of trust, a trustee’s duties may also include:

• Handling day-to-day oversight: The trustee may oversee the general administration of the trust, including handling everyday tasks (like maintaining records) or long-term actions (like paying ongoing bills or taxes).
  
  
• Distributing assets: It’s the trustee’s responsibility to distribute the trust’s assets to beneficiaries. The declaration of trust may also instruct them to use the assets to pay bills, taxes, or any ongoing healthcare expenses, if the trustor is incapacitated.
  
• Paying taxes: Trustees may have to file and manage taxes for property within the trust.
  
  
• Taking care of certain bills: Using assets from the trust, the trustee may also have to handle other bills or payments. This could include attorney fees, utility bills for any property owned by the trust, or the trustor’s healthcare or funeral costs.

A trustee’s specific duties will depend on the type of trust they’re managing, as well as the instructions laid out in the declaration of trust. Responsibilities can also vary based on whether the trustor is deceased or if they are incapacitated. If the trustor is incapacitated, a trustee may be directed to use trust assets to care for them.

Frequently asked questions

Can a trustor serve as trustee of their own trust?

Yes, in many instances, a trustor can be the trustee of their own living trust (which is a trust they establish during their lifetime). If a trustor appoints themselves as trustee, they should also nominate a successor trustee to administer the trust after they become incapacitated or die.

There are some exceptions in naming yourself as trustee. For example, you can’t be the trustee of a trust that will be established after you pass away (known as a testamentary trust). If you have any questions or concerns, speaking with an estate attorney can help.

Can a trustee also be the beneficiary of a trust?

Yes, a trustee can typically also be a beneficiary of a trust, whether it’s a sole person or an organization.

Because this could create a conflict of interest, you may choose to appoint a co-trustee (or trustees) and have them work together to administer your trust. This can help ensure that each trustee is acting in the best interest of all beneficiaries — not just themselves.

What happens when a trustor dies?

When a trustor dies, the assets continue to be controlled by the trust. If the trustor was acting as trustee during their lifetime, their successor trustee then takes over management of the trust.

The trustee must administer the trust according to the trustor’s guidelines. This could include communicating with and distributing assets to beneficiaries, and terminating the trust once the assets are distributed.

Can a trustor appoint multiple trustees?

Yes! As trustor, you can appoint as many trustees as you’d like to oversee your trust. However, selecting multiple people for the role can open the door for potential conflict.

When opting for more than one trustee, consider setting clear guidelines and expectations for each person in your trust documents. For example, when it comes to decision making, you can decide if your co-trustees have to reach a unanimous decision (meaning they all agree) or a majority decision (meaning most of them agree) before they can act. It’s a good idea to choose people who you think will work well together.

Next steps: Creating your trust

Trustors and trustees are essential roles in the creation and management of trusts. A trustor creates a trust, fills it with assets, and leaves instructions for how it should be managed. They also appoint a trustee, who is responsible for administering the trust according to the trustor’s wishes.

If you’re interested in creating a trust as part of your estate plan, consider a revocable living trust (RLT). RLTs are one of the most common trust types because they’re flexible, allowing you to make changes to the trust throughout your lifetime. With an RLT, your assets will skip probate and go directly to your beneficiaries after you pass away, often saving them time and avoiding court costs.

If you're interested in creating a trust, consider using FreeWill’s revocable living trust tool, which will walk you through the process of creating a trust. It’s secure, easy to use, and valid in all 50 states.