Future Business Leaders of America (FBLA) Business Law Practice Exam

In a trust, what is the primary responsibility of the trustee?

1. To buy and sell property

2. To hold title to the property for another's benefit

3. To act as a mediator between parties

4. To manage investment portfolios

The correct answer is: To hold title to the property for another's benefit

In a trust, the primary responsibility of the trustee is to hold title to the property for the benefit of another party, known as the beneficiary. This fiduciary duty underscores the trustee's role as a steward of the trust assets, managing and protecting those assets in accordance with the terms set forth in the trust document and in the best interests of the beneficiaries. The trustee must ensure that the assets are handled properly and that the intentions of the trust creator, or grantor, are honored. This includes making decisions on how to manage, invest, or distribute the trust property as directed by the trust. The obligation of the trustee is not merely administrative; it carries a responsibility to act in a manner that prioritizes the beneficiaries' interests, highlighting the trust's nature as a legal arrangement focused on the welfare of those designated to benefit from it. While buying and selling property, acting as a mediator, and managing investment portfolios may involve functions tied to a trustee's role, these actions are part of the broader responsibility of holding title and managing the property effectively for the beneficiaries' benefit.