Much has been written and said about the powers and duties of trustees and the law can be complicated. This note does not pretend to do more than answer some commonly asked questions and in so doing give a brief sketch of what being a trustee involves.

What is a trustee and what is a trust?

A Trustee is a person who, usually alongside up to three others, is responsible for the proper running of a trust. A trust is a very flexible way of separating the control and long term preservation and devolution of capital from its immediate enjoyment.

Why have I been asked to become a trustee?

The person or persons with the power of appointing new trustees will have asked you to become a trustee because they trust your judgment and your probity, and because they believe that they can rely on you to implement the terms of the trust and manage it properly.

What does a trustee have to do?

You have a legal duty as a trustee to manage the trust for the benefit of the beneficiaries in a prudent and sensible way. Although you can, as necessary and as permitted by the Trust Deed or the general law, employ people to help you and delegate, you are ultimately personally liable to the beneficiaries for the proper administration of the trust.

Please expand on the question of personal liability?

This means exactly what it says. Trustees only have the powers given to them by law or by the trust document; and if they act in excess of those powers then they will be personally liable if things go wrong. And even if you act within your powers, but in such a way that the trust suffers financially then you may be personally liable in some circumstances. You may also be personally liable if you enter into a contract under which the obligations exceed the trust's assets.

What are the terms of the trust?

You need to have a copy of the trust deeds and should ask for an explanation of anything you do not understand. You need to be clear who the beneficiaries are, what their entitlement to capital and income is and whether that entitlement is fixed by the trust deeds or whether the trustees can decide the way in which the beneficiaries are to benefit.

What are the trust assets?

They may sometimes be listed in the deed appointing you but you should anyway make sure you have a copy of the latest accounts (if it is an ongoing trust) or portfolio valuations.

How are the trust assets used to benefit the beneficiaries?

This should be done in accordance with the terms of the trust deed. If there is land that would normally be either occupied by the beneficiary or let and the income paid to the beneficiary. If there is an investment portfolio then the income will normally be mandated direct to the beneficiary. The position may be more complicated where there is more than one beneficiary, in particular if there are young children and/or you have discretion as to the way in which the beneficiaries are to benefit. Obviously, you should take trouble to "know your beneficiaries" and their differing needs and requirements. If you have any questions at all, you should ask for a full explanation.

Who holds the trust assets?

Assets should be held in the name of or to the order of all the trustees. Investments will frequently be held by nominees for the trustees' order. You need to know what the arrangements are and to be satisfied that, with the other trustees, you control the assets.

Who manages the trust assets?

It is common for investment managers to be appointed and given complete discretion but you need to be clear what the arrangements are. Property will usually be managed by an agent on behalf of the trustees.

How do the trustees carry on their business?

Some trustees meet annually, some more frequently and some less frequently or not at all - much depends on the complexity and nature of the trust. If there are no meetings you need to be in close enough touch with your fellow trustees to ensure that the trust is running properly. Trustees must usually act unanimously.

Do I get paid for acting as a trustee?

No. Unless you are acting as a trustee in the course of your profession or the trust document specifically permits it, you cannot charge for acting as a trustee nor receive a secret benefit from the trust. You are, however, entitled to be reimbursed your expenses. This rule does not prevent a trustee also being a beneficiary and benefiting in that capacity.

Becoming a trustee sounds a pretty demanding task?

Yes, it can be. Indeed, it has been said that the law knows no greater responsibility than to be a trustee. We at Adams & Remers are here to guide you through all this and help you fulfil and properly carry out your duties as a trustee.

For further advice contact our team direct or talk to your usual contact in the firm.