What is a trustee?

A trustee is a person or a company that acts on behalf of another person. The trustee manages assets that belong to someone else, such as money, documents, or claims. Although the trustee acts in their own name, they do so exclusively in the interest of the so-called trustor.

Important: The trustee does not become the owner of what they manage. They may only use the assets as agreed. There is a special relationship of trust between trustee and trustor. Without this trust, a trustee arrangement is not possible. The legal responsibility always remains with the trustor.

In everyday life, there are many situations in which trusteeship plays a role – for example in finance, when purchasing real estate, or when managing outstanding claims in debt collection.

Who can be a trustee?

In principle, any legally competent person can act as a trustee. In practice, however, this role is usually taken on by individuals or companies with legal or financial expertise. These include, among others, notaries, lawyers, tax advisors, banks, or specialized service providers such as debt collection agencies.

The decisive factor is that the trustee acts reliably, neutrally, and in compliance with the law. They must manage the entrusted assets properly and strictly adhere to the agreements made with the trustor.

Who commonly acts as a trustee in debt collection?

In the field of claims management, debt collection agencies are the most common trustees. They are tasked with collecting outstanding claims on behalf of the creditor. This means they communicate with the debtor, receive payments, and forward the money to the creditor in trust.

Lawyers may also act as trustees in certain cases, for example when enforcing claims through court. Acting as a trustee allows them to operate in their own name, but for the benefit of the creditor.

What are the duties of a trustee?

A trustee is responsible for managing assets or rights on behalf of another person. The specific duties depend on the content of the trustee agreement. Typical tasks may include:

Managing or forwarding money
Collecting claims
Holding or transmitting contracts
Reviewing and securing documents
Monitoring payments

In debt collection, the trustee’s role typically includes handling the entire process of a claim. The trustee ensures that payments are correctly received, processed, and eventually disbursed to the creditor. They must document everything accurately and comply strictly with legal requirements.

What obligations does a trustee have toward the trustor?

A trustee must always act in the best interest of the trustor. Key obligations include:

Duty of care: The trustee must manage the entrusted assets diligently and properly.
Duty to account: The trustee must disclose their actions upon request.
Separation of assets: Trust assets must not be mixed with the trustee’s personal property.
Prohibition of personal use: The trustee may not use the assets for personal purposes.

If these obligations are violated, the trustee can be held liable.

How does a trustee relationship arise?

A trustee relationship arises when one person transfers certain rights or assets to another for the purpose of management. This is tied to a clear instruction to use these assets solely in the interest of the transferor. Typically, this is done through a written contract.

In business contexts such as debt collection, this type of agreement is common. The contract specifies exactly what the trustee is allowed to do and what not. It also sets out the duration, obligations, compensation, and liability.

An oral agreement is possible in some cases, but it brings legal uncertainty. Therefore, a written agreement is recommended.

What documents govern a trusteeship?

In most cases, the trusteeship is governed by a trustee agreement. This includes points such as:

Who is the trustor and who is the trustee?
What exactly is being transferred or managed?
What rights and obligations apply?
How long is the agreement valid?
What happens in the event of a breach?

In the debt collection sector, a written power of attorney may be sufficient instead of a full agreement. This allows the collection agency to act on behalf of the creditor.

How does a trusteeship differ from an assignment?

The key difference lies in ownership. With a trusteeship, the creditor remains the legal owner of the claim. The trustee is authorized to act but must follow the given instructions and forward any outcome (such as received payments).

With an assignment (also called a cession), the claim is fully transferred to another person or company. This new owner may act in their own name and on their own account.

In debt collection, trusteeship is often the preferred option because it allows the creditor to retain full control over the claim.

Where is trusteeship used in debt collection?

Trusteeship plays a central role in debt collection, particularly in what is known as fiduciary collection. In this setup, the collection agency handles the entire process of a claim. However, the legal ownership of the claim remains with the original creditor.

This method is especially useful for companies with a high volume of individual claims – for example, in e-commerce, the mobility sector, or for service providers with monthly billing. The creditor doesn’t have to manage reminders and payments personally but still retains full oversight and control over the claim.

Debtors often cannot tell whether the collection agency is acting on behalf of the creditor or whether the claim has been sold. The process remains largely the same. However, it is important to note: trusteeship means that the money is securely held by the collection agency and properly forwarded to the creditor.

What legal principles apply?

In Germany, trusteeship is not regulated by a single law. Instead, the rules come from various provisions of civil law and other legal sources. This is because trusteeship is used in many areas – from real estate transactions to financial services and debt collection.

Depending on the type of trusteeship, different legal foundations may apply. Especially in business contexts, clear agreements are essential. Written arrangements help define responsibilities, rights, and liability issues.

What laws are relevant to trustee relationships?

The most relevant laws for trusteeships include:

§§ 662 ff. BGB (Mandate) – govern unpaid trustee relationships
§ 675 BGB (Service contract) – applies to paid trustee services, such as in debt collection
§ 54 HGB – governs commercial representatives with power of attorney
Legal Services Act (RDG) – defines who may provide legal services such as debt collection

For certain professions like lawyers, tax advisors, or notaries, additional professional and ethical rules apply.

These legal principles ensure that trustees act under proper control and maintain the trust that the system relies on.