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TECHNICAL BRIEFING BECOMING A TRUSTEE
Rachael Holland, head of tax
and estate planning, Skandia
International
“
Clients often
think a trust sounds
complicated and
expensive, and
appointing a trustee
can be a key
concern – but it
need not be
It is not uncommon for a
client to be asked by a
family member or friend to
become a trustee, and
many will jump at the
opportunity to help. But it
is essential that a client, as
a potential trustee or as a
potential trust settlor,
understands what their
responsibilities are.
In addition, a client
should consider the benefits
of using a professional
trustee over selecting
friends and family members
to execute the trust.
l The basics
A trust is a legal agreement
which, in its basic form,
has three parties:
� A settlor – the person
who generally provides
the asset to put into the
trust;
� The trustees – who are
the legal owners of the
trust; and
� The beneficiaries – those
who are entitled to benefit
from the trust.
Trusts can be a useful
technique to move assets
out of an estate – perhaps
to reduce investors’ potential
liability to certain taxes.
They can also help avoid
the often lengthy delays
associated with administering
estates so that, in the
event of the death of the
investor, the people named
to benefit from the estate
can do so quickly.
Clients often think a
trust sounds complicated
and expensive, and
appointing a trustee can be
a key concern – but it need
not be. There are no restrictions
on who can be a
trustee, providing that the
person is aged 18 or over
and is mentally capable.
Appointing a trustee is a
simple process, and once
named, they will have
equal say with other trus-
Trustee duties can be much
more complicated and
demanding than anticipated, and
appointing a family member or
friend is not always in a client’s
best interest. The answer may be
to use a professional service
that can provide the broad
range of expertise required
A safe
pair of
hands
tees as to how the trust is
invested and distributed.
Removing a trustee is a
very complicated process,
making it paramount that
they are selected only after
careful consideration.
l Making the choice
When selecting a trustee,
the settlor should answer
the following questions:
� Will the trustee have the
necessary judgement,
BENEFITS OF A PROFESSIONAL
� Ensure client’s wishes are carried out precisely in line with
requests
� Decisions made in a professional and unbiased manner
� Professional management of all trust paperwork
� Ensure the trust is kept up to date with any changes in trust law
� Reduce the workload for advisers and trustees
”
INTERNATIONAL ADVISER [www.international-adviser.com] AUGUST 2008
skills, perspective and
time to perform their
duties adequately?
� If the trustee is related
to a beneficiary, do they
have the necessary objectivity
to act impartially,
as well as the aptitude to
deal with any family
conflict?
� Trusts can often span
several generations, so
trustees may die or wish
to retire from their
duties. Who will then be
appointed by the remaining
trustees to manager
the trust?
l What to expect
Once appointed, trustees
are required to fulfil the
following duties:
Trust conditions and
general laws: Trustees
must comply with specific
conditions contained in
the individual trust deed
– unique to each trust
– and with the statutory
obligations set out in the
Trustee Act 2000 (section
1). The act, which applies
to English law trusts only,
introduced a ‘duty of care’
for trustees to follow when
carrying out their trustee
responsibilities.
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