Trustees — What responsibilities do they have?

What is a trustee?

A trustee is a person or a firm that holds and administers property or assets held in a trust for the benefit of a third party. A trust can be created for a variety of purposes. For example, trusts can be established in bankruptcy situations or in certain types of retirement plans or to manage assets for a minor or someone lacking capacity. Alternatively, a trust may be established to hold assets with income and capital to be distributed to beneficiaries over time.

Trustees have a fiduciary responsibility to the trust's beneficiaries which means the trustee must act in the best interests of the beneficiaries when managing the trust assets.

What are a trustee's duties?

A Trustee's duties are many and varied.

Making Decisions

Trustees must make all the decision regarding the trust. They must decide on the acquisition, application and disposal of the assets. They also need to implement the purposes of the trust for the benefit of the beneficiaries. They must also make decisions within the rules of the trust and have a duty to exercise reasonable care, skill and diligence when making decisions and managing the assets of the trust.

The Trustee Act 2000 extended the power of investment trustees have whilst protecting the interests of the beneficiaries against abuse of these powers.

When making decisions, unless otherwise provided for in the trust document, trustees decisions must be unanimous.

Managing assets

Trustees are responsible for managing the assets in a trust, be they money, financial instruments, property or other assets. Trustees must keep accurate records of all trust activities, including income, expenses and distributions.

Administering the trust

Trustees must administer the trust in accordance with the terms of the trust deed. This includes distributing income and capital to beneficiaries, filing tax returns and paying any tax due on behalf of the trust.

Acting impartially

Where there is more than one beneficiary, trustees must act impartially and balance the interests of all beneficiaries fairly.

If you would like some further information about trustee responsibilities, contact us today on 01502 532300 or email us using the 'make an enquiry' form.

This is not legal advice; it is intended to provide information of general interest about current legal issues.