All Your Trustee Questions Answered.
This brief guide has been produced as a general guide to trustee powers and duties. It is not a substitute for professional advice. Don't forget, you can always contact us for help and assistance.
Definition of a Trust
A Trust is a legal arrangement whereby assets are transferred by the Settlor (the person or people who set up the Trust) to people called Trustees for the benefit of the people who you want to inherit, called the Beneficiaries.
The relationship created baby the Trust of these 3 parties gives rise to powers, duties and obligations by the Trustees. Duties are owed to the Settlor (to follow their directions or wishes) and to the Beneficiaries, to ensure that they receive the appropriate assets as and when specified by the Trust Deed.
The Trustees manage the Trust Fund for the Beneficiaries, who will receive the property in the Trust in line with the Settlor’s directions in the Trust Deed.
Further, if the Settlor has reserved, for example, a right of occupation in a trust property for themselves, the Trustees will be responsible for ensuring that takes place.
The Trust Deed specifies the Trustee powers to carry out their duties.
Trustees should read the Trust document, understand it and discuss it with other Trustees as relevant.
There is a fiduciary relationship between Trustees, Beneficiaries and often the Settlor. A fiduciary relationship in this regard is a special type of legal relationship. In short, Trustees must act in the best interests of the Beneficiaries.
When acting for or on behalf of the Trust, a Trustee must have the 'power' to do whatever he or she is going to do. That is, either the Trust itself or the law relating to Trusts authorises those actions.
Trustee records and accounts
Trustees must keep records of decisions and actions to prove they are managing the Trust properly, for example, records of any meetings that they hold, by keeping minutes.
Often, where a Trust is set up of a property, and the Settlor is to remain in the property for their lifetime, little needs to be done.
An initial set of minutes should be kept when the Trust is set up, noting that the trustees have read and understood their obligations under the Trust Deed, and perhaps deciding that another meeting does not need to be held, unless something significant changes, until the death of the Settlor.
Who can be a Trustee?
All Trustees must be over 18 and have the mental capacity to look after the Trust Fund. They should also have a good financial history. That is, not have been made bankrupt or been subject to penalties for financial offences.
Can a Beneficiary be a Trustee?
It is possible for a Beneficiary to be a Trustee, as long as it does not create a conflict of interest.
How many Trustees should there be?
It is recommended that there are at least two Trustees. Where land is involved, the land registry will only register a maximum of four on the land register. If the Trust property is sold, the signatures of 2 Trustees will be required to effect the sale. It is possible to have 1 Trustee, but an additional Trustee will need to be added at a later point if property is to be sold.