What is a Trustee?
A Trustee is appointed to administer a Trust, which will be comprised of assets. Those assets could be comprised of property, money or shares etc. He or she will manage the assets and distribute them as instructed within the Trust Deed. The role can last for a considerable period of time, until the Trustee can no longer undertake their duties, due to incapacity or their eventual passing. In those circumstances a nominated ‘Successor’ will assume responsibility.
Often a Trust will relate to minor children and consequently the Trust may be in place for some years, before the Trust is settled.
Ther Trustee’s primary duty can be summed up by saying that they must act in the best interests of the Trust, to protect and safeguard your legacy. It follows therefore that the role should be assigned to a responsible person, who is aware of their duties and obligations and is readily able to discharge them.
Who should you appoint as Trustee?
Significant thought should be given to the person(s) to be invited to act as a Trustee. The important thing is that you must have trust in their abilities to discharge their duties and administer the trust properly. Often therefore the Trustee may be a member of your family, or a close friend. As an extra precaution you may wish to appoint a Solicitor or specialist Lawyer to undertake the role, as they may already know you and your family circumstances.
Finally, you could appoint a dedicated Trust Company to administer the Trust – albeit it may come at a great cost.
If you are considering the need to establish a Trust our experienced Solicitors and specialist Lawyers in the Private Client Department are on hand to support you through any difficulties you are facing. To discuss how we can help, please contact your local Kingsfords office in Ashford, Cranbrook or Hythe.
The Trustee Duties & Responsibilities
There are several primary aspects for the Trustee to follow:
They must Understand the terms of the Trust, its aims and how best to protect its assets.
The Trustee owes a Fiduciary Duty of Care to take actions in the best interests of the Trust and its Beneficiary. Subject to the instructions given in the Trust the Trustee should Invest Assets to protect them both now and in the future.
Using the Trust as a guide the Trustee will need to Administer the Trust and Distribute the assets in accordance with its terms. Accordingly there is an obligation to make the right Decision at the right time as the Trust dictates, or at the Trustee’s Discretion if empowered to do so. In that instance the overreaching obligation to act in the Trust’s best interests again comes to the fore.
The Trustee will naturally need to retain accurate Records and attend to any tax returns and issues as they arise.
What if things go wrong?
Providing a Trustee follows their fiduciary duty and retains accurate records to reinforce the fact that they have acted in the Trust’s best interests all should be fine. Being a Trustee does however come with a legal obligation. If therefore you have not acted in the best interests of the Trust, you could be subject to court action and sanctions being made against – including the repayment of any losses suffered. That being the case you may feel that it makes sense to have alongside you as a Trustee, specialist Solicitors or Lawyers. The Trust may already have appointed such legal representatives as Trustees, or a Trustee may be empowered under the Deed to retain them, if considered appropriate.
Will a Trustee be paid for their service?
If the Trustee is a family member, or close friend there is not an immediate expectation that the Trustee will be recompensed for their role save for “reasonable compensation”. This may involve out of pocket expenses etc. Sometimes the Trust may actually define what such compensation covers to assist. If professionals are retained, then it would be “reasonable” for them to levy their charges for the services undertaken.
Conclusions
Appointing a Trustee, or becoming one is a serious subject and should be given close consideration as to the responsibilities and obligations involved. If you wish to seek advice before engaging in the process and/or want to see how much the creation and the administration of a Trust might cost, we can provide an estimate with no obligations. We will be happy to assist with all aspects of the creation and administration of a Trust.
Please contact your local Kingsfords office in Ashford, Cranbrook or Hythe. Alternatively, you can send an enquiry and a member of our team will get back to you promptly, by calling us on 01233 665544 or emailing via enquiries@kingsfords.net.