08.05.24

I have recently become the Trustee of my family Trust. What are my responsibilities and which should be my priority?

Many people regard an invitation to become a Trustee as a major achievement or a family duty they feel they cannot refuse. However, being a Trustee brings with it a number of important responsibilities which should be considered before accepting the invitation.

As a Trustee you must observe a number of statutory and regulatory requirements. It is important to note that you can be personally liable if you get it wrong, therefore it is vital that you are fully aware of your obligations and duties and that you carry them out properly.

Your main priorities should be to:

  1. Observe the terms of the trust. You must familiarise yourself with the Trust deed. It tells you what type of Trust it is, identifies the Beneficiaries, tells the Trustees what they can do and gives the Trustees important powers. If a Trustee acts outside of these terms they can be personally liable.
  2. Maintain the Trust assets. The Trustees have a duty to acquire, control and preserve the Trust assets. Therefore, make sure that the investment portfolio is properly managed by a qualified investment manager, that the portfolio is sufficiently diverse and that you review performance regularly against agreed benchmarks.
  3. Exercise reasonable care. Lord Blackburn stated in 1883 that a Trustee sufficiently discharges his duty if he manages the Trust in the same way as an ordinary prudent man of business manages his own affairs. The Trustee Act 2000 confirms this duty of care for all Trustees.
  4. Act impartially between the Beneficiaries. As a Trustee of a family Trust, it might be tempting to favour one side of the family. However, unless the terms of the Trust allow you to do so, it could result in you doing things you should not do and a failure in your duty as Trustee to act fairly between the Beneficiaries.
  5. Work with your co-Trustee(s). All Trustees’ decisions have to be unanimous. Therefore, make sure that you work closely with your co-Trustees. Never make Trustee decisions alone.
  6. Review records and maintain tax compliance. Make sure that proper Trust records are kept, that you properly review and approve the Trust accounts when they are produced and that everything is correctly reported to HM Revenue & Customs — failure to do so can result in significant financial penalties.
  7. Record all decisions made. Trustees must be able to demonstrate that all their decisions are based on reasonable analysis and judgement. Failure to evidence this can sometimes have serious consequences for Trustees, both collectively and individually.

How can we help?

At Renaissance Trust, our team has over 35 years’ experience in the management of Trusts, including family Trusts with complex, and/or large investments and assets. We will work with you to ensure the best outcomes for your family.

We also provide Trustee services, with some families appointing us as a co-trustee, so that we can work alongside them to provide expert support and can deal with all aspects of compliance, while they can assist us in making decisions relating to their loved one. We are also able to act as sole Trustees.

Our specialist team are happy to give advice and guide you through the process to enable you to achieve the most beneficial outcome.

Contact us for a discussion about your situation.

 

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Author:
Scott Clayton

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