Trustees' Duties and Powers
Duties
A Trustee owes a duty of honesty, integrity, loyalty and good faith to the beneficiaries of the trust. A trustee must at all times act exclusively in the best interests of the trust and be actively involved in any decisions. Prior to accepting the position of trustee, a potential trustee must ensure that:
- there is no conflict of interest between his or her own personal circ*mstances and those of the beneficiaries;
- they have read and understood the trust documents;
- they understand the nature of the beneficial interests and as much about the beneficiaries personal circ*mstances as will be necessary to administer the trust;
- they are satisfied there are no outstanding breaches of trust by the existing trustees;
- they have ascertained the extent of the trust property and will ensure that, once appointed, it is vested in the names of the new trustees.
General Duties of a Trustee
To observe the terms of the Trust
Trustees must inform themselves of the terms of the trust and comply strictly with the duties and directions set out in the trust deed.
To act impartially between the beneficiaries
Trustees must not allow one beneficiary to suffer at the expense of another and must balance potentially competing interests for income and capital.
To provide information
Trustees are under a duty to provide clear and accurate accounts and produce any information, or other documents relating to the trust when required to do so by a beneficiary.
To act unanimously
(unless otherwise permitted by the trust deed)
To exercise reasonable care and ensure the correct distribution of assets.
To provide an income for the beneficiaries and to preserve the value of the capital.
Powers
The precise powers that a trustee has will be defined by the trust deed and by law. However, a trustee will normally be given the following powers:
- investment;
- dealing with land;
- delegation to agents, nominees and custodians;
- insurance;
- remuneration for professional trustees;
- advancement of capital;
- maintenance of minor beneficiaries;
- to pay, transfer or lend funds to beneficiaries.
All the powers of a trustee are ‘fiduciary’, which means that they must be exercised as follows:
- in the best interests of all the beneficiaries;
- only for the benefit of the beneficiaries and not for third parties;
- not for the trustees’ benefit, unless specifically authorised;
- not to defeat the terms of the trust, but in compliance with them and in consideration of all other relevant circ*mstances
We can help
Because of the complexities and peculiarities that can arise in the day to day administration of trusts, it is advisable for trustees to seek professional help.
We can advise you, as necessary, on the nature and extent of your powers and duties as a trustee. We are also able to offer professional trustee services through the appointment of individual partners in the firm
If you wish to receive further advice on your responsibilities as a trustee, please get in touch with the Private Client Team direct or speak to your usual contact in the firm
