What to do when you become a Trustee

When you become a Trustee, typically for a friend or family member, it can seem very daunting. Not only do you want to guarantee that the finances of your friend or family member are completely secure, but you also want to ensure that you follow all the legal requirements. This is why most Trustees seek advice from Independent Financial Advisers.

What is a Trust?

A Trust is often established for someone who is vulnerable, and can’t necessarily manage their money themselves. It may be:

• Someone with a permanent disability
• Someone who has suffered an injury through an accident
• Someone with long term care needs
• A child who is under 18
• The person who the Trust is in favour of is known as a beneficiary.

A Trust agreement is a legal document which is designed to protect the finances and assets (such as investments or cash deposits) of those beneficiaries so they get the most out of their money. Anything held within a Trust (regardless of what it may be) is known as the Trust property.

What is a Trustee?

A Trustee is someone who has been legally appointed to take responsibility of the Trust on behalf of a beneficiary.

Although the Trust property is legally owned by the Trustees, they can’t usually benefit themselves from the Trust unless the agreement states that they can.

The main point of being a Trustee is to act in the best interest of the beneficiary.

What are the responsibilities of a Trustee?

Trustees have to ensure that the assets are fully protected and used for the good of the beneficiary. Details of what they can and can’t do are set out in the Trust agreement.

Some Trust agreements will be specific. For example, the assets must pay for the beneficiary’s care costs. If that’s the case, the Trust property would not be able to be used for anything else. Income Tax, Capital Gains Tax and Inheritance Tax are all taxes which may need paying depending on the type of Trust. 

Another thing that Trustees are responsible for is ensuring that tax is up to date and paid. This would usually involve completing a tax form and submitting it to HM Revenue and Customs. Income Tax, Capital Gains Tax and Inheritance Tax are all taxes which may need paying depending on the type of Trust.

Above all, Trustees must act prudently and for the benefit of the beneficiary in all that they do.

What should be considered when becoming a Trustee?

Becoming a Trustee is an extremely important role as you’ll probably be helping someone who is dear to you. However, it’s something that needs to be considered carefully as there is a lot of work and responsibility involved.

There are things that need to be considered before taking up the role as Trustee, including:

• If you don’t act in the best interests of the beneficiary, you may be taken to court
• If you don’t carry out your duties properly, and there are losses, you may be liable for those losses
• If you manage the Trust properly, it can take a lot of your time
• Being a Trustee can be a long-term commitment

How can Adroit Financial Planning help?

Adroit has been providing advice and assistance to Trustees in respect of Trusts for many years and has an extensive amount of experience.

We understand that Trustees want the best for the beneficiaries they represent and welcome professional financial planning advice from Independent Financial Advisers.

From opening Trustee bank accounts to managing Trustee investments, we can provide all the necessary advice and assistance to ensure that you’re able to carry out your role as Trustee to the very best of your ability and fulfil all legal requirements.

Should you require advice from one of our experts, please contact a member of our team on 0800 884 0006 or contact us online.