I’m a Trustee – What do I need to know?
So you’ve found out that you have been named as a Trustee and now need to consider what this involves. For many people the concept of a Trust is new to them and, therefore, the possibility of acting as a Trustee may be quite daunting.
Some general information about Trusts and their administration can be found here.
This blog provides the answers to some of the key questions that we get asked by new Trustees when they are first considering the role.
Do I have to act as a Trustee?
No, you don’t have to accept the appointment and will need to consider a number of points before you make the decision whether to act at a Trustee or not. These include considering whether you have the necessary time and skills to act and what is involved with the particular Trust you will be managing. However, the person setting up the Trust will have chosen you for good reasons and feel that you are the best person to act in this role.
How many Trustees does there need to be?
A minimum of two Trustees must act at any time and a maximum of four can be appointed. You will need to make decisions unanimously so it is important that you feel you can all work together.
What do I have to do?
This will depend on the type of Trust that you will be a Trustee of. Some of the main tasks a Trustee has to undertake are:
- Reporting the Trust to HM Revenue & Customs and filing relevant tax returns
- Investment and management of the Trust assets
- Consider the needs of the beneficiaries and making decisions about the use of the Trust assets to benefit those people
- Keeping accurate records on decisions made and preparing Trust accounts
Do all of the Trustees have to meet?
It is preferable for the Trustees to have regular meetings to discuss the Trust and make decisions. This may be once a year if the trust is relatively straightforward but can be more often if needed. It is usual for Trustees to live in different areas, and sometimes a different country, so the Trustees are not always able to meet in person and it is common for meetings to be held remotely (by Zoom or Skype). Decisions can also be made between Trustees by phone or email.
As previously mentioned, it is essential that the Trustees act unanimously so you will need to ensure that all Trustees are involved in the management of the trust.
Can I take advice to help me in this role?
Yes, it is common for Trustees to take professional advice on a number of issues. Many Trustees ask for legal advice to get the Trust started and ensure that they have complied with all of their obligations.
Trustees can also take financial advice regarding the investment of the Trust assets and, if the Trust is larger or more complex, they can ask an accountant to prepare the tax returns.
Do I get paid?
Unless there are provisions in the Trust, it is usually only professional Trustees who can be paid. Where family and friends are appointed as Trustees they will be acting without payment.
However, it is usual to be reimbursed for any expenses incurred in acting as a Trustee.
Am I personally liable for anything I do as a Trustee?
Trustees can be liable for breaching any of their duties. The Trust provisions usually set out the limit of the Trustees’ liability and it is usual to protect the Trustees from liability where they act in good faith.
The best protection when acting as a Trustee is to ensure that you act reasonably and fairly when making decisions and, if you are not sure about an element of the Trust management, you take the relevant advice.
Does this affect my own tax position?
No. Acting as a Trustee does not affect your own personal finances or tax position. The Trust will have its own tax record and you will be recorded as a Trustee on that record.
Can I stop acting as a Trustee?
Yes, you can retire as a Trustee if you decide you no longer want to act. The process for retiring is usually for you to sign a document confirming your retirement and completing any paperwork to transfer the assets to the other Trustees. In some cases, you might need to appoint another Trustee to replace you.
If you would like to discuss your own personal situation with regards to being named as a Trustee or you have a question about a Trust you are currently managing please get in touch and speak to one of our specialists.