When someone sets up a trust, either during their lifetime or with their Will, they appoint people as trustees to manage the trust. The Will or trust deed will usually include specific instructions about administering the trust but there are also some legal duties and responsibilities that will apply.
Trustees must manage and administer trusts effectively to comply with their duties and responsibilities as a trustee, comply with the various Trustee Acts and comply with any reporting obligations to Government organisations.
Trustees must act with honesty, integrity, loyalty and good faith to the beneficiaries of the trust. They must act exclusively in the best interests of the trust and be actively involved in any decisions, whilst complying with the various Trustee Acts and the terms of the trust.
If trustees do not comply with their duties and responsibilities, they may be found to be in breach of trust. The beneficiaries may apply to the Court to have them removed or the Court may instruct the trustees on how to administer the trust.
Trustees must act unanimously, unless the Will or trust deed specifies otherwise.
Should conflict arise between the trustees, they should attempt to resolve their disagreement between themselves and the beneficiaries, but where this is not possible, they may seek guidance or mediation from a solicitor or, as a last resort, the Court.
General Duties and Responsibilities:
• Learning the terms of the trust
• Identifying and taking control of the trust assets
• Identifying the beneficiaries
• Investing the trust funds
• Balancing the interests of the beneficiaries
• Collecting the income and payment of trust expenses
• Keeping accurate records and accounts
• Making distributions to the beneficiaries
• Having regular reviews or meetings
• Reporting to Government organisations
The Government’s aim to reduce tax evasion and entering into exchange of information agreements with other jurisdictions, have resulted in a number of reporting obligations that the trustees may need to attend to, such as:
• HM Revenue & Customs to report and pay income tax and capital gains tax
• HM Revenue & Customs to report and pay inheritance tax
• HM Revenue & Customs to comply with Automatic Exchange of Information and Common Reporting Standards
• IRS to comply with the Foreign Account Tax and Compliance Act
In doing so, you may need to consult a solicitor or accountant.
A trustee may retire from his position as trustee. A replacement trustee may need to be appointed in his place. This should be done formally by a deed.
A beneficiary may be a trustee, although depending on the terms of the trust, this may want to be avoided.
In certain circumstances, a trustee may be remunerated for his services.
Trustees may generally invest in anything which they may invest themselves as an individual, subject to any restrictions in the trust deed or Will. They should invest appropriately and diversify the trust assets accordingly, taking into account the terms of the trust, the value, suitability and timescale of the trust. The Trustee Acts, case law and the Will or trust deed will consider what is suitable. You may need to instruct a professional person such as a stockbroker or financial advisor.
WBW Solicitors have a specialist trust team and would be happy to assist in managing and administrating trusts or simply advising on them, for further information, please click here.
To arrange a no obligation consultation with a member of the private client team please call 01626 202404 or email email@example.com.