Who Runs My Trust?
Once property is settled in the trust, the trustees(s) 'take control' of the assets and are in charge of running the trust.
The trustee(s) are appointed by you (the settlor), and therefore you have control as to who you want to elect. In fact, a settlor can elect themselves to be a trustee - a situation that is particularly common in practice.
The Role of the Trustee
The trustees will oversee the day-to-day running of the Trust and manage your trust's assets, for the benefit of the beneficiaries. They usually have discretion to decide on what actions to take concerning property belonging to the Trust and can decide on what payments should be made from the Trust. Their actions will also be guided by the settlors' wishes and directions set out in the; Trust Deed and Memorandum of Guidance, along with the requirements set out in both statutory (Trustee Act 1956) and equitable law.
In practice, it is very common for there to be two or more trustees. For any additional trustees it is essential that you choose someone whom you know and trust, as all trustees have the same powers and responsibilities.
The person(s) you elect to be co-trustees should be someone who is willing to stand by your side, someone who is ready to make difficult decisions to protect you, act for the beneficiaries' interest, or be able to voice their concern if you are failing to meet your duties as a trustee.
Co-trustees also will allow your trust to carry on should you fall sick, are incapacitated or when you have passed on. In their capacity they may have to deal with difficult situations concerning the other beneficiaries, and they may have to face heavy criticism and sometimes even legal action for their inaction or their decision making.
For those reasons it is essential that trustees are guided by the settlors' Directions in Wills, Wishes and Letters of Intent, and most importantly the Deed of Trust.
It is a legal duty of the appointed trustees to see ensure their duties are performed. Trustees therefore have a twofold duty to
a) manage the Trust (making all the decisions), and
b) oversee its administration (recording all the relevant decisions).
Whether there is one trustee, or multiple trustees, it is crucial that they keep records. By maintaining records, it provides evidence that the Trust is being correctly run, that the trustees' are performing their duties and the trustees are acting prudently.
Commonly, this is achieved through a Minute Book and an Annual Review for the Trust.
The Minute Book is the historical record for the Trust and contains the Resolutions (decisions of trustees), other details, events, and information about the operation of the Trust
The Annual Review supplements the Minute Book. It provides an opportunity to either compile a Minute Book if this has not been done, or to review your minute book together and reflect on the decisions that have been made, in order to ensure the trustees have performed all of their obligations. Furthermore, the annual review also provides an opportunity to start planning for future years and identify ways to maximise the benefit your trust provides.
While record keeping is pivotal, the trustees should be aware that they may have to make the Minute Book and the Financial Statements of a Trust available to the beneficiaries. In legal procedures they may also have to make these documents available to a Court of Law if that is requested by a claimant.
If you would like to learn more, please make an appointment to see us.