Have you been asked to become a trustee by a member of your family or a close friend? Many people feel privileged in being asked but it is important to know exactly what it means to be a trustee. A trustee’s job is to manage the trust. Put simply, a trust is a legal way in which a person (your family member or friend) can give a gift to others without actually giving them any control over it. Why would anybody do this?
A trust can be created in two ways, the first is when you are living and the second is on your death through your Will which is the most common type of trust. Trusts in Wills take effect after you have died. There are various reasons for including trusts in a Will. A common one is because the person making the Will has young children or perhaps has a disabled or vulnerable person in their family that they wish to provide for after they have died. By law children cannot own property or money in their own name until they are 18 years old. Therefore any property or money left to them while they remain under 18 will have to be held in a trust.
A trustee’s job is to look after assets of the trust fund for the benefit of young children or vulnerable persons (called beneficiaries). As a trustee, you must act in the best interest of the beneficiaries at all times. This means that any decisions you make in relation to the assets are based on the needs of the person at the time. For example if they are in fulltime education you might have to arrange to pay school fees etc. You also have a number of duties and responsibilities which can include the following:
(a) investing the trust fund or trust assets in a responsible manner. You may want to take professional advice on how to do this properly;
(b) where the trust consists of property, making sure that these are safe and secure. For example you may need to put appropriate insurance in place to protect property;
(c) paying for the education and day to day needs of the beneficiaries as and when these are needed.
Being a trustee is not an easy job. The law gives you wide powers to look after the trust assets and trust fund. However, such wide powers go hand in hand with accountability. You must make sure that you use the trust funds and trust assets for the benefit of the beneficiaries only. This means that you cannot personally benefit from the trust. If you do, you will be in breach of your duties as a trustee and the beneficiaries can challenge you. Equally the court will take a very dim view if you have abused your powers as a trustee. It is therefore important that you seek professional legal advice on the full extent of your duties and responsibilities so that you can do the job properly. Some appointed trustees will often appoint a professional firm to manage a trust particularly if the trust fund is large.
This is but a brief insight into the role of a trustee. If you need specialist advice on your role as a trustee, please contact me Sangeeta Moore at The Law House on 020 8899 6620 or email me at firstname.lastname@example.org.