Who should you choose or use as a Trustee? And, What does a Trustee do?
In our blogs about Inheritance Tax Planning we frequently refer to Trusts and Trustees.
And, we’re often asked, “Who should I choose or use as a Trustee?” and “What do they do?”, so we hope this short introduction helps answer any initial questions you may have.
Who can be a Trustee?
Anyone can act as a Trustee assuming they are sane and over the age of 18, so this can include friends, relations and close relatives.
A trustee is an individual who has been appointed to take responsibility for managing money or assets that have been set aside in a trust for the benefit of someone else. Normally appointed upon the creation of a Trust but can be added at any point in the future.
Trustees should always be chosen wisely as they will be dealing with the trust assets and distributing these to beneficiaries.
The duties of Trustees can be split into two categories, general duties and specific duties.
General duties of a Trustee
Similar to a code of conduct, they include some of the following.
- Duty to act within the powers of the trust – They can only act with the powers given to them via the trust deed or by law
- Duty of care – Trustees owe a duty of care to the trust beneficiaries when administering the trust
- Duty to act impartially – The trustees need to act in the best interests of all beneficiaries especially where there may a right to income and others have a right to capital
- Duty to consult – All trustees should consult one another about all trust decisions
Specific duties of a Trustee
These are actions that trustees must take and include some of the following:
- Duty to take control of the trust property – Trustees need to establish the extent of the trust property and then ensure it is correctly transferred into their ownership
- Duty to take advice – The trustees have a duty to obtain advice on any matters that they may not be competent to resolve themselves
- Duty to invest – Trustees have a duty to invest trust assets, they must consider an investment strategy and act in the interests of the beneficiaries
- Duty to keep accounts and to distribute – Trustees must keep account of any trust financial transactions and also ensure they make the correct payments to the correct beneficiaries
Thank you to Techlink who provided their technical expertise for this blog.
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