12th May 2021

The Role of a Trustee & Practical Considerations

Trusts are a very common vehicle to protect assets for other people, such as young people or those with additional support needs. Anyone with legal capacity can act as a trustee. However, before you take on this role, it is important to be aware of your responsibilities, to ensure that you are well equipped to fulfil the role before you agree to act.

Many trusts are created within a Will, though they can be created in your lifetime. Your trustees, as the name suggests, should be people that you can count on to administer the trust in accordance with your wishes and instructions. Charitable trustees are subject to slightly different rules.

As a Trustee, you will technically own any asset which has been put in the trust and are responsible for managing them in the best interests of the beneficiaries, in accordance with the trust deed. While there are a number of trustee duties, one of the principal duties is the duty of care.

The Duty of Care

All trustees owe a duty of care to the trust, in all of their trust dealings, to ensure the trust property is protected for the beneficiaries. This means that you should manage the trust assets with the same level of care and diligence as you would your own affairs. Effectively, don’t do anything with the trust’s assets that a normal person wouldn’t do with their own assets.  This is to prevent trustees from being reckless or negligent with trust assets.

While in theory the duty of care is straight forward, the practicalities may cause trustees to, unintentionally, fall foul of the duty of care imposed.

Potential Pitfalls

  • You have a busy full time job, and family life. With a busy day to day life, you may think “I will deal with this outstanding trust bill in a few weeks.”  However, in applying the duty of care, you should deal with trust bills in the same way as your own (promptly!)
  •  You are acting as a trustee for a family member’s trust, where you also benefit from the trust. There is a house in the trust, and you want to sell it so you, as the Beneficiary, can have some funds released. You need to be very cautious when acting as both a trustee and a beneficiary, to ensure that you do not allow your interest as a beneficiary to conflict with the trust interest. The property should only be sold if it is in the interests of the trust.
  • You attend a trustee meeting, and incur travel costs, together with your lunch on the way. The trust deed allows for you to be reimbursed for reasonable expenses and you agree with the other trustees to be paid for travel and for lunch.  As you are in a rush, you forget to keep receipts. By failing to keep accurate accounts, you may have breached the duty of care.

While these are minor issues, with no malicious intent, it is important to consider how such potential breached can occur easily. Nevertheless, being a trustee can be a very rewarding role, and there a few things to consider before you agree to the role:

Top tips

  1. Make sure you have time, and don’t think just about your availability now, but also consider your potential availability in the future as a trust may last for a number of years.
  2. If you, or someone you know, will benefit from the trust, think about whether you can separate your personal needs and from what is best for the trust and the trust beneficiaries.  
  3. Put in place a system to keep accurate accounts and receipts from the outset to ensure you can differentiate between your own finances and the trust finances.
  4. If possible, talk to the person who is asking you to be a trustee, and discuss how they envisage the trust being administered. This may help you to decide whether you think you can carry out their wishes
  5. If you have any queries about the role of trustee, seek expert legal advice.

At Blackadders we have specialist trust team who can assist in the administration of trusts. We can also act as a professional Trustee, alongside other trustees, or as the sole trustee so that we can assist in the administration of the trusts and ensure that the duties of the trustee are fulfilled. Please contact the Blackadders Private Client and Executries teams working in Aberdeen, Dundee, Edinburgh, Glasgow, Perth and across Scotland.

Duncan Shaw, Trainee Solicitor
Private Client
Blackadders LLP
@traineeshaw

www.blackadders.co.uk

 

 

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