As a trustee, you are responsible for looking after assets on behalf of beneficiaries. This requires up-to-date knowledge of trust law and the reporting requirements that go with it. If you fail to exercise care when performing your duties, you may incur personal liability and become financially liable for losses to which you have contributed.

We help trustees stay on top of their obligations. We can assist in the administration of the trust to the required standard, removing the burden from trustees and avoiding HMRC penalties. Our service covers a range of tasks including:

• ensuring the trustees understand the terms of the trust
• helping trustees understand their legal powers and responsibilities
• managing trust administration for trustees throughout the life of the trust
• reviewing the trust regularly as required by the Trustee Act 2000
• preparing the annual trust accounts
• dealing with trust tax compliance
• providing beneficiaries with information
• acting as professional trustees.

Whether you wish to create a trust or are a trustee yourself, we have the expertise to assist you. We offer a complete service, from trust formation right through to ongoing trust management and reporting. You can be confident of meeting all legal and financial obligations for the life of the trust and beyond.

Trustees are responsible for managing the trust efficiently to protect the assets and interests of the beneficiaries.

As part of this, there are several legal duties that you must fulfil, and five statutory powers which you may use to carry out your duties. Failure to comply with your duties and use your powers honestly can have serious consequences, including personal liability for any losses, so it is important to understand what your duties and powers are.

The duties of a trustee

• Care and skill: You must use reasonable care and skill when managing the trust, taking into consideration your level of knowledge. Professional trustees are held to a higher standard.
• Comply with the terms of the trust: Trustees must follow the provisions of the trust and not act outside the scope of their authority.
• Honesty: You must act honestly in the best interests of the beneficiaries and not take advantage of or profit from any position of power you may have.
• Avoid conflicts of interest: You must avoid any conflict between your personal interest and those of your role as trustee, ensuring you act in the best interests of the trust’s beneficiaries at all times.
• Act impartially and in good faith: You must make decisions based on what is best for the beneficiaries, without favouring any one person or group over another.
• Invest trust funds sensibly: Trustees have a duty to protect the trust’s funds and invest them in a way that is likely to give the greatest returns available within reasonable limits.
• Keep accounts: You will need to keep accurate and up-to-date records of all financial transactions made on behalf of the trust and complete annual tax returns where required.
• Seek professional advice: If necessary, you must seek out specialist advice to fulfil your duties competently.
• Act unanimously: Decisions must be agreed upon by all trustees, with a few limited exceptions.

The five statutory powers of trustees

• Investment: Trustees have the power to invest the trust’s assets which they must balance against a duty to ensure investments are reasonably diversified to reduce risk and changed if necessary for the benefit of the beneficiaries.
• Insurance: Trustees can arrange insurance cover for any assets held in trust or liabilities incurred by them as trustees.
• Advancement: Under certain circumstances, trustees can advance money from the trust to a beneficiary, up to the whole of the beneficiary’s share.
• Delegation: Trustees can delegate certain responsibilities and decisions to an appropriate person or body, such as a professional adviser.
• Maintenance: For certain types of trusts, if a beneficiary is aged under 18 years, you are able to apply income from the trust towards the maintenance, education and benefit of the minor beneficiary. The rest is accumulated and added to the trust’s capital.

Why is this important?

If a trustee fails to discharge their duties, or oversteps the limits of their power, they may be held personally liable for any loss or damage suffered. The trustee may also be removed from their position. It is therefore important for trustees to understand their duties and powers and act with the proper standard of care when managing the trust.

For more information or advice about your duties as a trustee, please contact us.

Creating a lifetime trust, such as a family trust, can help ensure that your assets pass tax-efficiently to your loved ones, while protecting trust assets from assessment for residential care fees. We can help you plan ahead and preserve family wealth for the next generation.

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Created by your will and taking effect on death, a will trust can be an effective way of passing wealth to your loved ones while avoiding unnecessary Inheritance Tax.

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If you are a foreign national living in Britain or have overseas interests that may be subject to taxation abroad as well as here, then your estate plan will need to take into account multiple jurisdictions. This adds more complexity but can also create opportunities for reducing your tax liabilities.

Our international estate planning solicitors can assist you with effective strategies for structuring your global wealth. We can help you:

• Move wealth between countries
• Change your domicile for tax purposes
• Set up trusts that are compliant with different sets of laws
• Minimise the impact of double taxation
• Transfer assets during your lifetime
• Support family members around the world
• Manage your intentional portfolio for the benefit of future generations

Our team is made up of experts in international tax law and estate planning who work with clients around the world. However large your estate and wherever it is located, we can help you put the right structures in place to ensure it is passed down intact. Please contact us for a confidential discussion about your needs.

For UK/US tax advice, please contact our UK/US  tax and estate planning lawyers.

Estate planning is essential to protecting your wealth for future generations. It is not just about saving tax, but ensuring that, when the time comes, all your assets go to the right people at the time and in the manner you want them to, as tax-efficiently as possible. Whether your focus is on preserving a family business, controlling your wealth, or shielding foreign assets from unnecessary taxation, we can help you minimise your liabilities and ensure the best possible outcome.

Estate planning encompasses everything involved in preparing for life’s eventualities, including death and incapacity. It involves creating an overall plan for how your assets will be managed, disposed of or distributed after death, including how taxes are to be paid and which heirs or charities should receive what you’ve left behind.

Many confuse estate planning with making a will, but they are not the same thing. While will-making is an important part of estate planning, your strategy may also include:

• powers of attorney to appoint individuals to make decisions on your behalf if you are unable to do so yourself
• beneficiary designations for pension, annuities and life insurance policies
• setting up one or more trusts to safeguard assets for beneficiaries and potentially enjoy tax savings
• changing the ownership of your home or assets during your lifetime
• making use of lifetime gift allowances and other exemptions to reduce your tax liability

Ultimately, estate planning is about creating the best legal structures for preserving wealth for future generations. Some of the benefits include:

• protects the wealth that you have accumulated during your lifetime from being eroded by taxation, estate expenses or legal fees
• ensures funds and assets are bequeathed as you wish
• appoints the right people to manage your estate and carry out your wishes
• helps you prepare for retirement or disability
• reduces the potential for family disagreements after you die

It is not possible to achieve these benefits with a will alone. Wills, trusts and other wealth-management structures often work better when combined than individually.

Inheritance Tax (IHT) is charged on death at 40% of the value of assets over a certain threshold, which at the moment is £325,000. If no reliefs were applied to an estate worth £1 million,  IHT of £270,000 would be due.

The burden of IHT has increased significantly over the last decade because the threshold above which tax is charged  has not changed for over a decade unlike the value of UK property. However, there are exemptions and reliefs that provide opportunities to mitigate your exposure to tax. You could, for example:

• Set up trusts that can hold assets outside of your estate and still pass them down to your children
• Use your annual IHT exemption to give up to £3,000 away each year or £6,000 if you haven’t used the previous year’s allowance
• Use your nil-rate band to transfer assets to a partner or spouse free of IHT
• Make use of the agricultural and business property reliefs

A professionally drawn estate plan, with proper tax advice, is the best way to reduce your IHT liability and ensure your interests are protected. Your solicitor will be happy to discuss your options in confidence.

A Lasting Power of Attorney is a legal document that allows someone to make decisions on your behalf should you become unable to do so yourself. You can give instructions on what should happen to your money, health or well-being in the event of old age, illness or injury that affects your mental capacity. While a will ensures your wishes are carried out after death, a Lasting Power of Attorney is created to protect your interests during your lifetime.

Find more information on our lasting power of attorney FAQs page.