Trustees
What Does It Mean to Be a Trustee?
Being asked to be a trustee is a significant responsibility, but what does it actually involve?
What Is a Trustee?
A trustee is an individual responsible for managing money or assets that have been placed in a trust for the benefit of someone else. As a trustee, your primary duty is to ensure that the trust’s assets are used solely for the benefit of the beneficiaries. You must follow the instructions outlined in the trust and preserve the value of its assets until they are ready to be distributed.
What Is the Purpose of a Trust?
Trusts are created for various reasons. If a trust is established within a will, it’s referred to as a Will Trust. Common reasons for setting up a trust include:
- Managing finances for children under 18
- Tax planning
- Providing income or property to a spouse
- Ensuring children inherit if a spouse remarries
Who Can Be a Trustee?
Anyone can be a Trustee, but it’s important to note that you cannot benefit from the trust unless the trust specifically allows it. It’s good practice to appoint at least one trustee who is not a beneficiary, ensuring there’s an impartial party overseeing the trust.
Due to the complexities of managing a trust, a professional trustee may be recommended to help. A professional trustee, in collaboration with other trustees, can:
- Hold trustee meetings
- Maintain accurate trust records
- Safeguard assets and manage their distribution
- Oversee investments
- Communicate with beneficiaries and resolve disputes
- File tax returns for the trust
Considerations for Trustees
- Helping others: Being a trustee is an important way to support someone close to you. It’s a role of trust and responsibility.
- Time and effort: Managing a trust can be time-consuming, and trustees are not paid for their work. The role is carried out for the benefit of the beneficiaries.
- Long-term commitment: Some trusts end when a child turns 18, while others may last up to 125 years.
- Collaboration: Decisions must be made in agreement with the other trustees.
Are Trustees and Executors the Same?
No, the roles of trustee and executor are different. The executor handles the administration of the estate and distributes the inheritance to beneficiaries. A trustee’s role begins when the estate funds are placed into a trust. While you can serve as both executor and trustee, it’s essential to understand the distinction between the two.
Can a Trustee Step Down?
Yes, a trustee can choose to renounce their role, or they may be unable to act when needed. This is why it’s advisable to appoint multiple trustees—if one cannot serve, another can step in. If only one trustee is appointed and they step down, they have the right to choose a replacement, or a third party, such as a solicitor, may be appointed
Please click below for a downloadable factsheet on Trustees