Duties of the Trustee

Being a trustee is a big responsibility. There are many legal duties placed on trustees. If a trustee fails to comply with these duties, the trust’s beneficiaries could bring legal action against the trustee.

Saturday, November 2nd 2002, 11:54AM

Some of a trustee’s duties are:

Making sure you know the Terms of the Trust
While this will appear obvious, it can be a problem for inexperienced trustees. The trustee must not only have read and fully understood the trust deed, but have an understanding of how case law and legislation affect the interpretation of the trust deed and the trustee’s obligations.

Taking control of and protecting the assets
It is fundamental that the trustee must fulfill this obligation. The trustee must hold documents of title, insure the assets and make sure that the trust’s assets are physically protected.

Meeting legal obligations
The trustee will have to meet all legal obligations imposed by the trust deed and the law. For instance, a tax return must be filed, proper records must be kept and there will usually be a requirement for annual accounts.

Investing the assets
Unless otherwise specifically instructed by the trust deed, a trustee must take into consideration when formulating an investment policy the amendment to the Trustee Act 1956 made in 1988, which places a greater responsibility on trustees.

Under the Trustee Act 1956, a trustee must exercise the care, diligence and skill that a prudent person of business would in managing the affairs of others. There is a list of factors in the Trustee Act 1956 that a trustee should take into account when setting the trustÕs investment policy. The law change was introduced to help protect beneficiaries from trustees who poorly invested assets and failed to follow prudent investment practices.

There are now examples of cases where trustees have been taken to court for not acting in a prudent manner in relation to the investment of trust funds.

To act impartially
This simply means that the trustee must take account of the interests of all beneficiaries and act without favour. This can sometimes be a problem where a family member or friend is the trustee.

Why consider Trustees Executors to be Trustee?
Firstly, Trustees Executors can act as sole trustee or as a co-trustee.

Impartiality can be very important, especially when a difficult decision might arise. Trustees Executors will stand in the middle, listen to all points of view and encourage a reasoned fair solution. If a decision must be made we will do so impartially having taken account of all factors.

A private individual might pass away part way through the trust and a completely different person might be appointed as his or her replacement. This can create problems of understanding, particularly regarding family circumstances and background knowledge. Trustees Executors has continued to act through many generations and offers the benefit of permanence.

Security is important when a trustee is holding trust assets. What if something goes wrong with the trustee’s personal circumstances? Could the trust assets get mixed up and lost? Will the private trustee always be reliable? Can you trust him or her well into the future?

Trustees Executors is a professional trustee company. It maintains professional indemnity insurance cover and keeps all client assets separate from its own by using individual trust accounts and by making investments in the trust’s name. Trustees Executors has acted as a professional trustee for over 120 years and this is an important reason why many people choose Trustees Executors.

Trustees Executors is a specialist trustee with knowledge of the law, whereas very few private individuals are specialist trustees. This experience and specialist skill can be put to benefit in managing your trust.

For more information talk to your local Client Account Manager or call Trustees Executors toll-free on 0800 Trustees (0800 87 87 83).

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