If you set up a trust, you can both safeguard your assets from taxation and provide for your loved ones financially. However for your trust to prove effective, you need to choose the right person to manage it. Prestige Tax and Trust Services explains how to pick a trustee.
Role of trustee
A trust is a legal instrument which you can utilise to manage your assets. There are several types of trusts and people set them up for a number of reasons, including to pass assets onto their loved ones either while they’re still alive, or after they’ve passed away. There are three parties involved in trusts:
- Settlor: The person or people i.e. you, who places their assets into the trust.
- Trustee: The person or people responsible for managing the assets held in the trust on behalf of its beneficiaries.
- Beneficiary: The person or people who benefit from the trust.
The role of a trustee is an important one, especially as they’re the legal owners of the assets the trust contains. The duties of a trustee are wide and varied. They include keeping property held in a trust maintained, manging the trust day-to-day and (usually) meeting its tax obligations.
Therefore, you need to ensure you pick the right person to serve as trustee when you set up a trust. If you pick someone who is unsuitable for the role, it could affect your beneficiaries’ future welfare. Here are the qualities we suggest you look for in potential trustees:
- Honesty: The position of a trustee can easily be abused. Pick someone honest to serve as trustee, so you know they will act openly and transparently while managing your trust.
- Experience: Managing a trust is not easy. You may want to choose a trustee with financial expertise, so they have the knowledge required to handle the trust’s monetary issues.
- Responsibility: A trustee has a lot of duties. We would advise you to choose someone you know is responsible, so they have the character required to handle the duties of a trustee.
- Caring nature: If possible, choose someone you know e.g. a family member. The fact they know and care about you, should motivate them to act in the beneficiary’s best interests.
Team of trustees
However, we would advise you to appoint a team of trustees. This way, you can pick people who have the individual character traits required to manage a trust effectively. For example if you want to appoint a family member as the trustee but they have no financial expertise, you could draft in someone who possesses this knowledge as a second trustee.
Prestige Tax and Trust Services
UK trust law can be complicated. We would suggest that you enlist legal aid when you decide to establish a trust. Prestige Tax and Trust Services would be happy to lend a helping hand. Our trust team possesses the skillset and legal knowledge required to navigate British trust law effectively, to ensure you can set up a trust.