The Role of a Trustee
What is a trustee?
A trustee is someone formally appointed to manage assets of a trust for the benefit of others (in this case the beneficiaries) and to administer the trust in accordance with the terms of the trust.
There is an ongoing obligation to act in accordance with the terms of the trust and in the best interests of the beneficiaries. Trustees also have a duty to act honestly and loyal and are required to act fairly towards the beneficiaries.
No more than 4 trustees can be appointed to act although reserve trustees can be appointed in the Will. A minimum of 2 trustees are required to be appointed with trusts including land or property. The reason for this is because no overreaching conveyance can be affected without the signatures of fewer than two trustees of land. Further, a sole trustee cannot give a valid receipt for the proceeds of sale or other capital money which arises under a trust of land as that also requires at least two trustees.
It is common for executors of a Will to also be appointed as the trustees although separate trustees can be appointed.
What age must a trustee be?
Under trust law, a trustee appointed must be the minimum age of 18 years old.
Choosing a Trustee
It is important to take care when choosing your trustees. You should consider whether they are able to take on the role. We have received enquiries where a parent wants to appoint their currently 18-year-old daughter to be the trustee. If the parent sadly died soon after, the question is would her daughter be able to carry out the role given the great deal of responsibility this involves?
Your trustees must be able to work well together where multiple trustees are appointed due to the requirement to make unanimous decisions. If you knowingly appoint 2 trustees who do not see eye to eye, the reality is that managing the trust and making any decision could become very difficult.
Your trustees must be of sound mind and trustworthy.
Many choose to appoint family members or trusted friends. Others may prefer to appoint a professional trustee if the estate is particularly complex. Alternatively, the trustee can seek advice from a professional trustee as and when required.
What are the duties of a trustee?
The duties and responsibilities of a trustee include but are not limited to:-
To act in accordance with the terms of the trust
Protect the assets of the trust
Act with duty of care in accordance with the Trustee Act 2000
Act fairly between the beneficiaries
Take reasonable care in making investments
Insure trust assets where necessary
Keep records of the trust’s income and expenses
Complete tax returns and pay any tax due to HMRC
Distribute income and capital to beneficiaries
Notify HMRC if IHT becomes payable
Declare all income and CGT for payment
Where trustees are not complying with their duties or responsibilities, the beneficiaries can apply to the Court to have them removed.