Trustee Duties - The basics of what you need to know
28th Feb 2016
I have recently had a number of clients ask questions about becoming a trustee having been appointed to look after assets on behalf of another. Some due to family members becoming unable to look after their own affairs due to old age and others unfortunately due to the passing of a loved one.
We have a great deal of experience in this field within the team, I was one of the first planners in the UK to attain the Society of Trust and Estate Practitioners Certificate in Trusts and Estate Planning and both Steve and myself hold advanced financial planning papers in taxation and trusts.
So I thought a quick blog on some of the key Trustee Duties may be useful to our existing clients and those reading the site.
Please note the following is based on the rules set out within the Trustee Act 2000 and cover the duties of trustees in England and Wales (Scottish Law is a little different).
Introduction
Trustees stand in a rather unique position, they are in effect, the owners of other people's assets and thus the law places a number of duties and responsibilities on them.
The prime duty of the trustee is to take personal responsibility for administering the trust and prudently managing the assets within it, for the benefit of the beneficiaries, whilst abiding by the powers given in law and the trust deed.
Becoming a trustee or agreeing to act as a trustee should not be a decision made lightly. Failing to fulfil your role correctly, could lead to a breach of trust and the beneficiaries have numerous ways to hold you to account for your action or inaction.
The most common question I am asked is “what are my duties as a trustee?” and these can be summarised as:
- To take possession or control of the trust assets
- Become familiar with the key facts and terms of the trust
- Seek professional advice if necessary.
Once you become a trustee you have a number of duties to fulfil, the key duties can be summarised as:
- To comply with the terms of the Trust
- To act in good faith
- To apply the trust fund for the benefit of the beneficiaries.
- To distribute correctly
- To act impartially
- To provide information and accounts
- To exercise appropriate standards of care
- To act personally
- To act without reward or profit
- To act jointly.
Whilst the above points give you an initial idea of the duties, each point can be further expanded into its own 500 word blog post. So if you want to discuss any of these points in more detail please call me and I will happily expand for you.
pAnother question I am asked is “who pays for the advice I need?” and this one is a little more straight forward to answer. Trustees are entitled to take professional advice, where necessary and this advice can be taken at the expense of the trust assets. Individuals moving into a trustee role really should consider taking and paying for the appropriate advice, as failing to do so could lead to you being held in breach of the trust.
Another area of enormous importance for a Trustee relates to their Investment Duties - What and Where to invest?
Again in general terms a trustee must have regard to the standard investment criteria imposed by the Trustee Act. This means they are generally under a duty to invest the trust property as long as:
Again, trustees have a statutory duty to take proper advice, both in advance of an investment decision being made, and on an ongoing basis. Trusts can last for many years and an investment strategy may need to alter over time in line with the beneficiary's requirements.
Trustees should look to avoid high risk investments as they sit at odds with the general purpose of most trusts, which is to protect and preserve the trust assets.
RVW WealthCare Ltd have a lot of experience in helping trustees and their solicitors with trustee investment decisions, so please contact us on 0121 325 6950 if you want to discuss trustee investments in more detail. We also have strong links with private client solicitors and accountants who can help with the legal and accounting side of trust affairs, should you require an introduction to a trust worthy professional to work with.