If you want to establish a ‘trust’ you’ll need to appoint a trustee. To explain why, this week Prestige Tax and Trust Services asks; what is the role of a trustee of a trust?
Why establish a trust?
A ‘trust’ is a legal instrument which is used to manage assets (e.g. land, buildings, money). There are two ways to create a trust; write one into your will or create a “deed of trust.” People write a trust for a number reasons. For example if you establish a Protective Property Trust, you can ensure your loved ones inherit your share of a jointly-owned family home. Alternatively, if you write a trust into a will, you can ensure your spouse is provided for when you pass away, while keeping your estate intact so it can be passed on to your children.
Role of trustees
However when you establish a trust you must ‘appoint’ a trustee. This is the person whose responsibility it is to administer the trust. They become the legal owners of the assets covered by the trust. This allows them to manage those assets in the best interest of the trust’s beneficiaries e.g. your children. The trustee’s role consists of:
- Keeping the property in the trust safe.
- Deciding how to invest the trust property, and determining how the trust property should be used.
- Managing the trust on a daily basis. This includes paying any tax due on any income or chargeable gains of the trust.
- Most importantly, dealing with the trust property as detailed in the will or deed of trust. This includes making payments to, as well as passing assets to, the beneficiaries.
Who to appoint
Trustees have a number of important duties, including acting in the best interests of the beneficiaries, and ensuring that they themselves don’t benefit from the trust. This means you need to think very carefully before you appoint someone to serve as a trustee.
The person/persons you choose should be trustworthy and honest and have some experience handling financial matters. They should also have the beneficiaries’ best interests at heart; for example if your child is the beneficiary, you might want to appoint another family member as the trustee. Finally, you should appoint someone who can reasonably be expected to outlive you, to ensure they can serve as your trustee.
Prestige Tax and Trust Services
The Prestige Tax and Trust Services team can help you set up a trust. We have the experience you need to ensure that when you establish a deed of trust or write a trust into your will, it will allow the trustees to carry out their duties and responsibilities effectively.