Sure, I’ll be a trustee: how hard could it be?
The short answer is: “Harder than you may think.”
Trustees are responsible for holding onto the trust fund on behalf of the beneficiaries. In simple, “bare” trusts this could seem like little work: just hold onto the funds until the beneficiary turns eighteen, for example. As long as you avoid blowing it all on yourself, what harm can you do?
But some trusts involve more complex assets: property, shares, antiques, large sums of money. This means extra attention is needed, such as accounting and legal advice, professional assistance, constant care and attention, property maintenance, and so forth. Trustees also need to ensure that all income, inheritance, capital gains and other taxes are paid annually.
If there are multiple beneficiaries, the trustees need to ensure that everyone’s wishes are recognised and considered before they make decisions. They need to keep records of all decisions made, money spent, advice taken and correspondence.
Bear in mind that trustees are personally liable for negligent loss. This means they have to pay the trust out of their own pocket for their mistakes. For example, if a trustee invests all of the fund in one company’s shares, and that company begins to fail, the failure of the trustee to mitigate that harm with all due diligence will mean she will have to pay for the deficit of value. She could also be held liable for not “diversifying the fund,” or for placing all of the eggs in one basket without seeking professional advice.
Ordinary trustees are not paid for their time, either, and are usually barred from seeking any benefit at all from the trust.
As such, being a trustee can often be an onerous, dangerous, litigious and thankless task.
Estate Case Manager
SWW Trust Corporation