Because trust funds do not belong to the Trustees personally, as they are holding the funds for the beneficiaries, the law places heavy duties and a high standard of care upon Trustees. Being a trustee is not a responsibility that you should take lightly as there is a lot you need to know as well as a lot that you have to do to fulfil your responsibilities
In many ways the duties on Trustees are onerous and a lay person should give careful consideration to accepting an appointment as a Trustee.
The principal duties of a Trustee are as follows:
• To take reasonable care in exercising their powers as a Trustee. The main duty is contained in Section 1 of the Trustee Act 2000
• To read and understand the trust instrument (i.e. the settlement or Will setting up the trust).
• To act fairly between beneficiaries e.g. In the case of a life interest trust, the trustees should strike a fair balance between immediate income return for the life tenant and capital growth for the beneficiaries after the life tenant’s death. In the case of a discretionary trust, the Trustees must fairly consider the interests of the beneficiaries and make a decision on reasoned grounds. Their decision must not be bought about through malice or discrimination against any one particular beneficiary.
• To comply with the terms of the trust: the Trustees will be liable for breach of trust if they do not comply with express terms of the trust and the law relating to the trust. The beneficiaries may be able to take the Trustees to Court for compensation for a breach.
• To provide information and accounts to the beneficiaries on request.
• To act unanimously unless there is an express power in the trust instrument for decisions to be reached by majority.
• To act without reward: the general rule is that a Trustee cannot charge for his services, unless they are a professional Trustee.
• Not to make a secret profit from the trust e.g. by supplying goods or services to the trust through the Trustee’s own business.
If you want more information about Trusts and how the SWW Trust Corporation can help you then call 01522 581 570 to speak to one of our experts or email [email protected]