What makes a good Trustee?
A Trust is a way of managing assets, for example money, a house and/or investments, for other people. There are a number of reasons why a Trust is set up; a person may be too young to manage money which may be given to them or a person may be disabled and vulnerable and may not have the mental capacity to manage assets given to them.
Most Trusts that are set up will only become active once the Settlors (the people setting up the Trust) have died. However, it is necessary for the Settlors to choose who they wish to act as the Trustees even though those Trustees may not need to act in the role until some time in the future. A Trustee is the person responsible for managing the assets held in the Trust and administering the Trust for the benefit of the beneficiaries.
One of the toughest decisions to make when setting up a Trust is choosing your Trustees, this is an extremely important decision as the people you choose will be responsible for managing the Trust and making important decisions that will affect the beneficiaries. It can take time to think through your options and come to a decision but it is necessary to do this to ensure your Trust is run as you would like it to.
Who can be a Trustee?
A person must be over 18 to be a Trustee and they must be someone that you, the Settlor, feel is responsible enough to carry out your wishes and ensure that all decisions are made for the benefit of the beneficiaries. The Trustee can be a family member, a friend or a professional person. It is also possible to appoint a Trust Company to act as a Trustee.
You can appoint any number of Trustees to administer a Trust, but it is most common to have between 2 and 4. If there are too many Trustees then it can be difficult to manage the administration. The Trustees need to work together and make decisions unanimously.
There are practical considerations to be made when choosing Trustees, for example where do the Trustees live? Can they all meet regularly or arrange to be in touch when decisions need to be made. It is possible to appoint a Trustee who lives outside the UK but you should consider how easy it will be for them to be involved with meetings and signing documents. Another consideration is how old they are, as I mentioned Trusts generally become active once the person who has set up the Trust has died, it’s important to consider who is more likely to be around and willing to act at that point.
Do all the Trustees you have chosen get on? Often a group of Trustees will include family members or friends that you know well and get on with. However, the individuals themselves may not know each other and may have very different views. Some thought needs to be given as to how the chosen group will work together.
We encourage you to talk to your potential Trustees before you appoint them. By explaining the role to them and giving them a chance to talk to you about your expectations, you can often prevent problems arising in the future. It also gives them the opportunity to say no before they have been appointed and then you can decide who else to appoint.
Reviewing your Decision
If circumstances change then you might want to change the Trustees, you have appointed. You should always keep your Trust under review and make changes when they are needed.
In the next blog I will be discussing how Trustees can be appointed or changed once a Trust is running.
If you would like to talk to us about setting up a Trust or your specific circumstances, please do get in touch.