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Joe from Prep Agent discusses the concept of a trustee, emphasizing its varying importance across different states. He simplifies the idea by using a real-life example, highlighting the three essential parties in a trust deed: trustor, trustee, and beneficiary. The trustor is someone seeking a loan to buy a house, while the trustee holds the title to the property for the lender, and the beneficiary is the lender who provides the loan. Understanding these roles is crucial in comprehending the trustee's function in real estate transactions.