Choosing The Right Trustees

When thinking about Estate Planning and passing on your wealth, there are many questions that you need to consider:

• Who am I going to leave my wealth to?
• If it is more than one person, then how will it be split between them?
• How will receiving the funds affect them?
• Will they look after my estate and pass it on to future generations?

There will be some people that you wish to pass your wealth on to, but it may not actually benefit them to receive the money. They may be under the age of 18. They may not have the right experience or knowledge to look after and manage the funds the same way that you did. It may even have a detrimental effect on them if they are in the process of getting a divorce or they may be on means tested benefits so by receiving the funds may actually leave them in a worse financial situation.

You may then wish to consider passing your estate on to other individuals to look after for the people you ultimately wish to benefit. These people are known as Trustees.

What is a Trustee?

Trustees are the individuals or organisations responsible for managing the trust’s assets and carrying out its terms for the benefit of the beneficiaries. Selecting trustworthy, capable, and impartial trustees is essential to ensure your wishes are properly followed. The next question would then be who do you pick?

What does a Trustee do?

Trustees have various responsibilities, duties and obligations to make sure that they are carrying out their role properly. This includes (but is not limited to) the following:

1. They need to keep the money separate from their own. Trust money must not be mixed with their own personal money
2. They need to provide accounts to show transparency of what money was received, what money was spent and how the final balance was arrived at for transferring to the beneficiary
3. They cannot profit or take advantage of their position as a Trustee. Any decision made must be for the benefit of the Beneficiaries, not themselves
4. They need to act impartially if there are more than one beneficiary
5. They cannot charge for the work they do for looking after the fund unless they are professionals and have been appointed as Trustees because of their profession. Even then, there must be an express provision confirming that when the Trust was created, you are allowing them to charge for the work that they do.
6. They should take advice from a suitably qualified financial advisor as to where the funds should be invested
7. There are reporting obligations to HMRC, both declaring that the Trust exists and then potentially tax returns and settling tax as necessary

Some of these obligations are imposed by legislation and others are imposed by previous cases in the Courts.

Who can be a Trustee?

In England and Wales, a Trustee must be over the age of 18, be mentally capable of acting and not an undischarged bankrupt. Trustees can be:

• Family members or friends
• Professional Advisers (e.g. Solicitors)
• Trust Corporations or institutions

However, Trustees must ensure that they are complying with all of their duties, responsibilities and obligations for the benefit of the ultimate beneficiaries and also to protect themselves. How complicated a Trust is, or the size of the Trust Fund will affect who would be the best person to appoint. If the trust fund is small and simple, then family and/or friends may be appropriate. However, if the trust fund is larger and/or more complex then professional trustees may be more appropriate.

If a Trustee is unsure about what they should be doing, then they should take advice from a suitable qualified professional advisor.

In relation to the administration of any type of Trust, the appointment of your Trustees is key to the success of the Trust and ensuring that you estate is used as you intended. You may know people that you believe are capable of fulfilling these responsibilities. However, the role of a Trustee is an obligation that you may not wish to impose on someone. You may not know anyone who is willing or capable of fulfilling these roles. If that is the case, then there is always the option of appointing a professional Trustee.

Professional Trustees will charge for the work that they do. However, it will then provide the peace of mind that your Professional Trustees have experience in these matters and also that they are regulated and insured so if there are challenges and complications, your ultimate beneficiaries are protected.

How Pinney Talfourd Can Help

At Pinney Talfourd, we have extensive experience advising and supporting Trustees and are regularly appointed to act as Trustees ourselves. If you are a Trustee or are considering creating a Trust, either during your lifetime or through your Will, please contact a member of our team on 01708 511 000 to discuss how we can assist.