Phospholipid asymmetry appears to be an evolutionarily conserved property of eukaryotic plasma membranes, suggesting it is crucial for their structure and function. It is fundamentally a non-equilibrium phenomenon since it can decay by lipids ‘‘flip-flopping’’ between leaflets. Cells must therefore maintain it by a variety of active mechanisms. This is easy for regular phospholipids, whose flip-flop takes hours/days but difficult for cholesterol, where these timescales are in the microsecond range. Cholesterol affects many properties of lipid membranes, from their elastic response to emergence of rafts in multi-component mixtures. It is therefore distressing that we know so little about its trans-membrane partitioning. We propose a theoretical model for the distribution of cholesterol in asymmetric membranes, focusing on the interplay of two dominant effects-difference in lipid composition, which leads to a partitioning bias in cholesterol, and lateral stress arising from crowding one leaflet with respect to the other. To test our theory, we employed coarse grained molecular dynamics simulations performed using the Cooke model. We find that our theory, which accounts for various elastic and thermodynamic drivers, explains the trends in our simulations. We show that the presence of cholesterol does not automatically result in tensionless membranes, even in the absence of preferential partitioning of this species. Additionally, we find that cholesterol's solvation bias can balance phospholipid number asymmetry, which results in strong correlations between cholesterol asymmetry and differential stress. Applying our theory to the most recent data on human RBC membranes suggests that close to 90% of all cholesterol resides in the exoplasmic leaflet, with a large remaining differential stress. This calls into question the notion of rafts being exoplasmic domains connected to liquid-ordered/liquid-disordered phase coexistence and forces us to rethink the common textbook picture of plasma membranes.