A trust is a legal entity that can own property and hold assets. Trustees, or a trust manager, is responsible for the day-to-day management of the trust. Typical trust manager responsibilities include buying and selling securities, balancing bank accounts and making payments to the designated trust beneficiaries.
There are many varieties of trusts, but from a legal standpoint most trusts are taxpaying entities. Many people transfer ownership of some of their assets to a trust in order to lower their individual tax liability. Other types of trusts are designed to hold money on behalf on legal minors or charitable groups. Laws in most countries, prevent the beneficiaries of the trust from having direct control of the trusts assets. The daily management of a trust falls to a custodian trustee or manager who has no ownership claim on the trust or its underlying assets.
A trust manager must file taxes on behalf of the trust. In many countries, trusts have to pay income tax. Consequently, the manager must report any income that the trust received as a result of selling assets or buying income-generating investments such as bonds or preferred stock. As with other types of legal entities, there are certain types of tax deductions that a trust can claim such as the trust manager’s wages and other operating fees. The trust manager must detail these deductions when filing taxes on behalf of the trust.
In many instances, the assets within a trust are sold upon the death of the trust creator or grantor. Sale proceeds are distributed to the named trust beneficiaries. The manager is tasked with contacting the beneficiaries and making arrangements to have sums of money or property transferred to these individuals. In the event that a beneficiary pre-deceases the trust creator, the manager must make arrangements to have that beneficiary’s share of the assets passed to another individual or organization.
There are laws in many countries that require managers of charitable trusts to produce annual financial reports that are shared with trust donors and beneficiaries. The report must include details of the trust’s financial transactions, property acquisitions and sales, and details of any disbursements that occurred during the prior year. Typically, the trust manager or trustee presents the report and answers questions from donors and beneficiaries. Generally, the manager must administer the trust in accordance with instructions laid out in the trust document. The beneficiaries and other relevant parties can lobby to have the manager removed if the manager fails to abide by the guidelines in the trust document.
Lawyers, accountants and brokers often work on a contractual basis as trust managers. They may be self-employed or employees of an organization but the trust is just one of their clients. Some law firms provide trust management services in which case a full-time trust manager may be appointed to administer a particular trust. These managers are generally salaried whereas independent trust managers are normally paid a fee for each segment of work they do on behalf the trust.