When a trust is formed, whether or not it’s a lifetime trust or created on the death of the Settlor by their will, the appointed trustees are faced with a lifetime obligation to fulfil the wishes of the deceased. There are a number of laws and regulations which dictate how a trustee must perform their duties and this involves investment planning, tax planning and dealing with one or more beneficiary. These duties can be very onerous for those who either have already busy lives, or who find dealing with one or more beneficiaries and HMRC, government departments and financial services difficult or distressing.
That’s why many people choose to appoint an independent Professional Trustee Solicitor.
To speak to one of our specialist Professional Trustee Solicitors, please call FREEPHONE 0800 1404544 or one of our local office numbers [see below] for FREE initial phone advice.
What are the duties of a trustee?
A trustee’s role is a responsible one. That’s why it’s really important that if you do accept the position of trustee, that you are fully aware of your possibilities. In doing so, please make sure that you both read and understand the trust deed and the individual needs of the beneficiaries of that trust.
In general terms, the main duties are as follows:
1. it’s critical that you actually understand the terms of the trust and keep to them
2. any trustee has a duty to act in the interests of the trust and its beneficiaries. That means, for example, that a trustee must not act for their own benefit and should avoid any risk of conflict between their own personal interests and their duty as trustee. Equally they should act impartially between beneficiaries
3. a trustee needs to act with what is a level of skill and care as reasonable in their circumstances. And circumstances include any knowledge or expertise the individual trustee has. So, for example, a solicitor acting as professional trustee is under a higher duty of care than a non-solicitor would be in the same circumstances
Please note that the basic duties of a trustee are set out in legislation – but an individual trust deed can alter or add to those duties
Although not necessarily essential, it’s usually a good idea for trustees, especially for those trust with larger assets, to hold annual meetings to review the assets of the trust and need to the beneficiary. And it sensible to keep written minutes of any such meeting.
Why appoint a Professional Trustee?
In addition to removing or reducing the burden any non-professional trustee is inevitably under, there are a number of really good reasons why you might wish to appoint a professional trustee. These include:
· providing independent decision-making – which can help to avoid any risk of conflict of interest, especially between beneficiaries
· providing experienced and professional help with compliance and regulation under the trust
· offering increased access to expert opinion and knowledge to safeguard the interests of the trust
· providing succession planning, as allow for by the Solicitors Regulation Authority ((SRA) – so when a solicitor retires or is in some way otherwise incapacitated, there will be another member of the firm able to take their place. So, you can be assured that there will be continual ongoing financial protection of the beneficiaries
Our expertise as Professional Trustees
Bonallack and Bishop have a long history of the administration of different types of trusts. We work closely with other experienced professionals and our combined team includes solicitors, accountants and investment stockbrokers; all backed with insurance and regulatory compliance, to ensure that you are protected for so long as you have the duty as trustee.
Why are trusts used?
Trusts are highly versatile legal instruments, and can be used in many circumstances, both for individuals and for your business.
But for individuals, perhaps the most common and most useful four reasons for setting up and running a trust are as follows:
· to protect the vulnerable. This may be someone who is elderly or has a disability including learning disability. It is unfortunate that the elderly and less able people in society are a target for those who would steal with them. A trust run by a professional trustee can protect them from that kind of risk
· to protect against means tested benefits being lost were a capital sum is left to the beneficiary (including disability benefits)
· to create a life interest – so the person may live for the rest of their lives in a particular property and receive income from accompanying investments, but then to allow the capital to be distributed to other beneficiaries (e.g. your children) following your death and that of the life trustee.
· to protect assets where there has been a divorce to ensure that the money goes to the chosen beneficiary rather than the former spouse.
What types of trusts can we can help you with?
As solicitors we deal with a variety of trusts, each of which are used to achieve a variety of different ends. They include the following:
• Bare Trusts
• Discretionary Trusts
• Inheritance in Possession Trusts
• Accumulation Trusts
• Mixed Trusts.
• Settlor-interested Trusts
Click here to read more about these different types of Trusts and how each of them can be used
How our Professional Trustee Service can help you
Among the responsibilities we can deal with on your behalf as professional administrators of your trust are the following;
· advising co-trustees about their powers and duties under the Trustees Act 2000
· helping choose an investment adviser
· preparing annual trust accounts
· advising on the various taxes which trust will be subjected to, including inheritance tax
· prepare the annual tax return and ensure that any monies due to HMRC are paid
· liaise with beneficiaries and other advisers to ensure that the trust continues to serve the purpose for which it was designed
· prepare all relevant deeds and resolutions so that both income and capital are managed properly
· advise about and implement the appointment and retirement of trustees
· manage property and other assets where there is an ongoing life interest.
Can Bonallack and Bishop act as co-trustees?
In short, the answer is yes – as an alternative for acting as the only trustees, we are happy to share responsibility with a non-professional trustee
Can a trustee delegate some of their duties?
Yes, they can – provided that such delegation is allowed under the terms of the trust deed.
However, any trustee doing so, must beware – because the overall responsibility remains with that trustee. As a result, the trustee needs to be really careful in choosing who to delegate responsibility to.
What kind of responsibility can be delegated?
A good example where it’s often sensible to delegate responsibility is with regard to investment. Financial advisers and stockbrokers are often appointed in this way. But it’s worth noting that any agent who does take on delegated responsibility in this way, must agree to stick to the terms of the trust.
And you should also be aware that as the overall responsibility remains with the trustee, that trustee needs to keep any delegated investment responsibility under review. However, if the trustee has acted reasonably in appointing the agent and with regard to regular review, there are likely to be responsible for any errors made by that agent.
What kind of records does a trustee need to keep?
So important that any trustee keeps full and accurate records of any action they take. This would include, for example:
· bank statements of trust accounts
· details of any investments made other expenditure made from the trust assets
· details of any expenses properly incurred
· any other information required for tax purposes
However, it’s not always necessary for these records to be kept in hard copy paper form. Increasingly records are accepted in an electronic format.
What sort of costs are involved in appointing an independent Professional Trustee Solicitor?
The fees we charge for trust administration include covering the legal and accountancy needs of the trust. In general, these are as follows, although the requirements of one particular trust may vary according to the individual circumstances:
· meeting with any co-trustee to review the terms of the trust and decide appropriate action
· meeting with beneficiaries as appropriate.
· financial investment planning – meeting with stockbrokers and/or other financial advisers and obtaining a review of the portfolio, followed by meeting to report to the clients
· tax planning and strategy – and reporting on that to the clients
· completing a financial strategy review annually and liaising with financial advisers
· completing and submitting trust annual tax return ensuring that payments are made to HMRC as required.
Can Bonallack and Bishop also act as professional executors?
Yes – in addition to acting as professional trustees, we regularly act as professional executors, with responsibility for the administration of probate. If you would like to talk to us about the possibility of getting us to act as executors either under your own will, or if you have been appointed executor by someone else, don’t hesitate to get in touch.
Click here to read more about the Role of the Executor