12 December 2024
A trustee can be an individual or a firm entrusted with holding and managing property or assets in a trust for the benefit of a third party. This trust can serve various purposes, such as managing assets for minors, individuals lacking capacity, or distributing income and capital to beneficiaries over time.
Central to a trustee's role is their fiduciary responsibility to act in the best interests of the trust's beneficiaries when handling the trust assets. This duty sets the foundation for the numerous responsibilities trustees must navigate.
Decision-Making
Trustees are tasked with making crucial decisions concerning the trust, including acquiring, applying, and disposing of assets. They must ensure these decisions align with the trust's purpose and are carried out within the trust's rules. Additionally, trustees are obligated to exercise due care, skill, and diligence in managing the trust assets.
Asset Management
Managing trust assets, whether money, financial instruments, property, or other types of assets, is a key responsibility of trustees. The Trustee Act 2000 expanded trustees' power to invest while safeguarding beneficiaries against potential abuse of these powers.
Beneficiary's Best Interests
At all times, trustees must prioritise the best interests of the beneficiaries, acting impartially and avoiding conflicts of interest. Upholding the rules outlined in the trust deed is essential, ensuring decisions align with the trust's objectives even if beneficiaries may not always agree.
Financial Compliance
Trustees are responsible for accounting to HMRC for any taxes owed by the trust, ranging from Inheritance Tax to Capital Gains Tax. Compliance with taxation matters, preparing annual accounts, and submitting returns are integral aspects of their duties.
Duty of Care
Adhering to the common law duty of care is paramount for trustees, requiring them to take prudent measures in managing the trust's affairs. Before accepting a trustee appointment, individuals should carefully consider the onerous duties and potential conflicts that may arise, seeking professional advice to better understand the responsibilities at hand.
By comprehensively understanding and fulfilling these obligations, trustees can effectively navigate their roles, ensuring the best outcomes for the trust and its beneficiaries.
Trusts are useful for a variety of family and tax reasons. You can appoint trustees to invest funds or look after property for your chosen beneficiaries. We can help you create, run and wind up trusts. Contact our Tax and Trusts department to find out more.
