Guide · 9 min · Last reviewed 30 September 2026
Trusts and trustees
A trust is a set of rules for property that someone else holds. The instrument is those rules, and almost everything later on this site is a version of that idea.
In brief
- Three parties: the settlor, the trustee, and the beneficiaries.
- The instrument says who decides investments, who decides distributions, and who can replace the trustee.
- The other chairs — adviser, committee, protector — only have the powers the instrument gives them.
- Ask counsel what this particular instrument actually says. A guide cannot read it.
The three parties
The settlor creates the trust and transfers property into it, the trustee holds legal title, and the beneficiaries are the people the instrument is written for. Those are the three parties. The trustee's chair can be filled by a company, by a person, or by a regulated trust company that serves the public, and it is the same chair either way.
A settlor creates the trust by signing the instrument. The trustee holds legal title. The beneficiaries hold the benefit. The instrument says which powers stay with the trustee and which are given to someone else.
Settlor
Creates the trust and signs the instrument.
Trustee
Holds legal title and carries out the instrument.
Beneficiaries
Hold the benefit the instrument describes.
What the instrument does
The instrument is the document. It names the trustee, says what the trust owns or will own, and says who may receive what, and on what terms. It also says which decisions the trustee still makes, and which ones have been handed to someone else.
If the instrument is silent, default rules in the governing law fill the gap. That is why two trusts with the same family can work differently. Have counsel read the instrument you actually have, not a description of trusts in general.
The office
The trustee owns the property on paper, and the beneficiaries own it in substance, which is the whole arrangement. The trustee can be a person, two people who have to act together, a regulated trust company that serves the public, or a private trust company the family forms for the job. The document is what says which of those decisions the trustee still makes.
Accepting the office is not a favor someone does for the family. The trustee has to know the document, know what the trust owns, and keep that property separate from everything else, because later someone will ask what happened, and if there is no file there was no administration.
You pick the first trustee, with your lawyer. After that, replacement follows the document: a named successor, a protector who can remove and appoint, or a judge if nobody thought about it. Death and a move do not end the trust. They only end that trustee.
The duties
Loyalty means the trustee works for the beneficiaries, not for its own product list. If the same firm is paid to be trustee and paid to invest the money, ask about that in the first meeting, and ask your lawyer what the conflict means in your state.
Prudence is judged on the portfolio as a whole, at the time of the decision, not on the one holding that later fell. Diversification is the usual default. If a ranch or a family company is meant to be held, that belongs in the document. Ask counsel how to write it.
Impartiality is the tension between the person receiving a payment now and the person who gets what is left. Someone has to be able to explain how that was handled. If you already know the children will not agree, do not assume the sibling who is also a beneficiary is the right person to decide. That is a question for the lawyer drafting the instrument.
Beneficiaries are often entitled to know the trust exists, who the trustee is, and enough about the property to see whether the job is being done. Families often ask for silence. Silence is how files end up in court. Tell the lawyer what you want withheld, and ask whether the statute allows it.
A clause that excuses the trustee is read narrowly. It will not cover bad faith. Don't choose a trustee because the exculpatory clause looks long.
What a year looks like
Investments and distributions are the decisions people argue about, but most of the year is quieter than that. Title has to be in the trustee's name, or in a company the trust owns, cash has to come in and be accounted for, and a distribution has to match a decision that someone with authority actually made. The accountant needs the tax information, a house needs insurance, and a private business needs a signature from the right person.
The file is the instrument, the inventory, the statements, the directions, and the distributions. When the trustee changes, that file is what gets handed over. Ask a prospective trustee what you would receive on day one if you left. If the answer is vague, that is something to take to counsel before anyone signs.
Being trustee is not the same job as being your lawyer, your accountant, or your investment adviser. The trustee talks to those people, and unless the family has separately hired the trustee to do one of those jobs and has accepted the conflict that comes with it, they stay in their own seats.
The other chairs
A directed trust can name an investment adviser, sometimes called a trust director, to direct investments. It can name a distribution adviser or a committee to direct distributions. A protector can be given power to remove the trustee, to move the trust, or to change administrative terms. Each of them has only the power the instrument gives. None of them becomes the trustee by being given a piece of the job.
Who should hold which power is a drafting question. Take it to counsel with the family's facts. This page does not assign the chairs.
Somerell administers private trust companies in Wyoming. It is not a trust company or a bank. It does not act as trustee or in any other fiduciary capacity, and does not offer to. It is not chartered or supervised by the Wyoming Division of Banking. Nothing on this site is legal, tax or investment advice.