A trustee is a person or other legal entity which manages a trust on behalf of a trustor and a trust beneficiary.
When a trust is founded through the creation of a declaration of trust (also known as a trust deed) by a trustor (also known as a grantor, settlor or trustmaker), the ownership of listed assets is transferred from the trustor to the trustee.
By accepting ownership of the assets, the trustee becomes responsible to insure that beneficiaries listed in the declaration of trust benefit from the trust fund as per the conditions laid out in the trust deed.
Trusts are widely used in countries with common law legal systems for both estate planning and wealth protection.
Under common law, a trustee can be appointed by a trustor without being party to the contract. This means that a trustor can appoint a trustee to whom they want to entrust assets without having to obtain the trustee's signature. Under Swiss civil law, a trust can only be created by the signing of a contract by both a trustor and a trustee.
Because the trustee is legal owner of the assets held in a trust, trusts allow for complex, conditional, ongoing financial transactions to be carried out in keeping in the absence of the trustor (after their death, for example). This is especially true when the trustee is a legal entity such as a bank, insurance company or law firm, rather than an individual.
The arrangement constituting a common law trust has only recently been defined under Swiss law. A number of similar financial instruments are available in Switzerland. Additionally, many trustees managing trusts on behalf of trustors in countries ruled by common law have operations in Switzerland.
The way in which assets held by trustees based in Switzerland on behalf of trustors in other countries are protected (if a trustee becomes bankrupt) and taxed, and the way that assets entrusted to trustees by trustors living in Switzerland are handled for tax purposes has been the subject of ongoing legislation.
Example of the function of a trustee:
A person wants to make sure that their grandchildren are provided for after they pass away. However, because their grandchildren have little knowledge or interest of managing finances, they would prefer to provide for these grandchildren in the form of lifelong annuities. The person is also concerned that receiving regular annuities will cause their grandchildren to become lazy or careless, so they do not want the grandchildren to receive the annuity unless they hold a job or run a business. If at some point in time one of the grandchildren does not meet these requirements, then the person wants the annuities paid out to a charity until the grandchild becomes eligible again.
Naturally after the person has died, there would be no way that the person could ensure that their grandchildren will meet their requirements or that annuities will go to a charity when requirements are not met. To get around this problem the person places the assets which make up the principal for the annuities in a trust.
The trust is dictated by the terms and conditions which the person as the trustor stipulates in the declaration of trust. The person selects a law firm as trustee and agrees to pay the law firm a fee for their services. The law firm ensures that eligible grandchildren receive their annuities, and that annuities for which any grandchildren are not eligible are donated to the charity stipulated in the declaration of trust.
Deal of the Day 
