What Is the Difference Between a Trustee and a Settlor on a California Revocable Trust?

By John Stevens J.D.

A settlor and a trustee are two distinct roles, although one person can serve in both capacities. A settlor creates the trust and can reserve important powers with respect to the trust. The trustee is obligated to manage the trust, in accordance with state law, after its creation and until the termination of the trust.

A settlor and a trustee are two distinct roles, although one person can serve in both capacities. A settlor creates the trust and can reserve important powers with respect to the trust. The trustee is obligated to manage the trust, in accordance with state law, after its creation and until the termination of the trust.

Creating a Trust

While sometimes referred to as a grantor or donor, in California, a person or entity that creates a trust is known as the settlor. The settlor may or may not be the trustee of the trust. For example, if a mother decides to create a trust and names her daughter as the trustee, the mother is the settlor but not the trustee. It is common, however, for the settlor to serve as the trustee. There can be more than one settlor and more than one trustee. If a married couple creates a trust and names themselves as trustees, each spouse is a settlor and a trustee.

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Managing the Trust

It is the trustee’s obligation to manage the property held in the trust and to carry out the terms of the trust. The trustee is also bound by rules imposed by California law, even if these rules are not expressly stated in the trust document. A settlor, by contrast, is not responsible for managing the trust unless, of course, the settlor is also the trustee. Upon the death of the settlor, the next trustee named in the trust document takes over the management responsibilities if the person accepts the position of trustee.

Revoking and Modifying the Trust

The power to revoke or modify a trust is almost always reserved for the settlor, as it is the settlor who created the trust and the settlor’s property that is held by the trust. If the settlor also serves as the trustee, then the settlor, as trustee, can revoke or modify the trust. It is possible for a settlor to name another person as trustee and give that person the right to revoke or modify the trust, but this arrangement is rare because it invites the possibility of mismanagement of the trust assets. The power to revoke or modify a revocable trust usually terminates upon the incapacity or death of the settlor.

Duties

Because the primary purpose of a trust is to distribute property upon the death of the settlor, or upon the satisfaction of some condition thereafter, California law imposes a number of duties on the trustee of a revocable trust. These duties include handling the trust for the benefit of the trust beneficiaries, protecting the trust property, and dealing with all of the trust beneficiaries impartially. Unlike with the trustee, the settlor has no such duties because the role of a settlor extinguishes as soon as the trust is created.

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Administration of a Testamentary Trust in Arizona

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Enforcing a Trust

A trust is a legal relationship in which a trustee holds property for beneficiaries, who are the individuals benefiting from the trust. The trustee must abide by the terms of the trust to manage property and distribute it to the beneficiaries. The person who creates a trust is known as the settlor, or grantor. The settlor can also serve as the trustee, naming a successor trustee who will take over for him following his death. Alternatively, the settlor can name someone else to serve as the trustee at the time he creates the trust. A trustee owes certain duties to the beneficiaries -- and the beneficiaries have a right to enforce the terms of the trust and hold the trustee in breach of his duties if he is performs any wrongful acts or omissions that affect their interests.

Living Trusts in Michigan

A trust is a vehicle for holding assets. In the United States, trusts are governed by state law. Although the Michigan Trust Code, found in the Estates and Protected Individuals Code, includes certain distinctive features, the basic principles of Michigan trust law are similar to elsewhere in the United States.

How to Transfer Property Into Trust & Title Insurance

As part of the estate planning process, an individual may choose to establish a trust to hold his wealth and property for the benefit of his spouse or other survivors. A trust agreement establishes the terms of a trust and becomes effective during the life of the settlor, or maker of the trust. A last will and testament, on the other hand, can be used to form a testamentary trust that becomes effective upon the settlor's death. Both documents name one or more trustees to hold and manage trust property. However, the method by which property transfers from the settlor to his trust has been cause of much consternation for some when they attempt to acquire title insurance on trust property.

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