Want to connect? Select someone below to view their profile.
Peter DanielPartner - Head of Private Wealth
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 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.
Read more
