What is a trustee?

A “trustee” is a person who is legally responsible for assets held in a “trust”. A “trust” is a legal arrangement used to protect assets, such as land, buildings or money for the benefit of the “beneficiaries” to the trust. Such assets are referred to as “trust property”. The trustees are legally responsible for the assets held in the trust and are required to manage the trust and carry out the wishes of the person whose assets were placed into trust. The person whose assets were placed into trust is known as the “settlor”.

How are trustees appointed?

Trustees are normally appointed in the document which creates the trust. A trust is normally created either in a will or in a legal document known as a “deed of trust” (sometimes called a “trust deed” or a “trust instrument”).

What is the role of a trustee?

A trustee’s role will consist of:

• Dealing with the trust property is accordance with the will or deed of trust. This will include making payments to and passing assets to the beneficiaries of the trust in accordance with the will or deed of trust;

• Managing the trust on a day-to-day basis. This will include paying any tax due on any income or chargeable gains of the trust;

• Making decisions as to how to invest the trust property and/or as to how the trust property is to be used;

• Keeping the trust property safe.

What duties does a trustee have when carrying out their role as trustee?

A trustee is under a duty to act in accordance with the rules of the trust. In addition the law imposes a number of other duties on trustees. The main duties of a trustee are as follows:

• To act impartially. A trustee must act in the best interests of all of the beneficiaries of the trust;

• To act with reasonable care and skill. All trustees are required to act with reasonable care and skill. If a trustee is a professional person, for example, a solicitor or accountant a higher standard will, however, be expected of them than that of a lay trustee;

• To secure and enquire of trust property. The trustees must find out what assets are owned by the trust and must make sure that such assets are kept safe. If money is owed to the trust the trustees may be required to recover such monies;

• To review investments. Trustees are required to formally review any investments, at least once a year;

• To keep records. In order to show that the trust has been managed properly the trustees are required to keep records of what they do. The beneficiaries of the trust have the right to see such documentation;

• Not to benefit themselves. Trustees are not allowed to profit from a trust, either directly or indirectly. They must not act in their own interests and they cannot charge for their time spent administrating the trust unless they are a professional trustee, for example a solicitor or an accountant.

What powers does a trustee have when carrying out their role as trustee?

The powers of a trustee will normally be set out in the will or deed of trust. Normally they will have the following powers:

• To invest monies held under the trust.

• To delegate certain powers to a solicitor or an accountant. Not all powers can, however, be delegated.

• To insure trust property.

• To be paid for their work. However, only professional trustees, such as solicitors and accountants, are allowed to charge for their work.