Appointing a trustee is one of the most important decisions you’ll make when setting up a trust. A trustee plays a critical legal role, with responsibilities that must be carried out with care, integrity, and in accordance with the law.
A trustee is a person or organisation appointed to manage the assets held within a trust on behalf of its beneficiaries. They have a legal duty to act in the best interests of the beneficiaries, manage the trust in line with its terms, and ensure compliance with the law.
Need help setting up a trust or appointing a trustee? Speak with one of our trust solicitors for expert legal advice and personalised support.
Key Areas
What is a Trust?
A trust is a legal arrangement where one person (the settlor) places assets under the control of another person (the trustee) for the benefit of one or more beneficiaries.
It is the responsibility of the trustee to manage the assets in line with the wishes of the settlor as set out in the trust deed or Will trust.
A trust can be created for many reasons, such as the protection of certain assets, providing for minors or vulnerable beneficiaries or inheritance planning.
Trusts allow the settlor to have a lot of control over how their assets are managed either during their lifetime or once they die but it does also come with a lot of responsibility on the trustees appointed.
Core duties and responsibilities of a trustee
Trustees have legal responsibilities as set out in the Trustee Act (2000). They are as follows:
- The duty to act in the best interests of the beneficiaries: Always prioritise beneficiaries and remain impartial.
- The duty to follow the terms of the trust: Enact the instructions in the trust deed or Will.
- The duty of care: Exercise care and use your experience when making decisions.
- The duty to keep accurate records and accounts: Maintain accurate accounts of assets, income, and distributions.
- The duty to act prudently with investments: Review and manage investments regularly, considering professional advice when needed.
- The duty to avoid conflicts of interests: Remain objective and do not allow personal interests to interfere.
- The duty to act unanimously (if multiple trustees are appointed): Co-trustees must make decisions together, with everyone in agreement unless the trust says otherwise.
Being a trustee may involve submitting tax returns, liaising with legal professionals and beneficiaries, and managing finances and property.
What makes a good trustee?
These extensive responsibilities require a solid understanding of the legal and practical implications of the trust and skill with managing property, assets and investments for the best outcome for the beneficiaries.
It is important that any trustees appointed have the following traits:
- Impartiality and trustworthiness
- Ability to manage financial and legal matters with skill
- Willingness to seek professional guidance when needed
- Ability to communicate effectively with beneficiaries
With this in mind, common choices for trustee appointments include:
- Close friends and family
- Legal and financial professionals, such as a trust solicitor
- A trust company or corporate trustee
People opt for professional trustees because, in many cases, they are more likely to be impartial.
What to do if a trustee breaches their duties
If the trustee fails to fulfill their responsibilities, for example, they may be mismanaging funds, making decisions for personal gain or breaking the terms of the trust, then there are legal implications.
The other trustees and beneficiaries can bring legal action against a rogue trustee in the form of holding them personally liable for losses to the trust and seeking court orders for their removal as a trustee.
Can you change a trustee?
A trustee can be changed in certain circumstances. These include:
- They are found to be in breach of their duties
- They resign from their trustee role
- Their death or incapacity
Changing a trustee is a relatively common occurrence, but it is advisable that those involved seek professional legal advice from a trusts expert to ensure that the process is carried out legally to avoid any problems.
Get in contact with Eric Robinson Solicitors today and one of our experienced trust solicitors will guide you through the following steps:
- Reviewing the trust deed to check the powers for appointment and removal
- Drafting a Deed of Retirement and Appointment (or similar legal document)
- Transferring trust assets to the new trustee(s)
- Updating HMRC or relevant authorities, if applicable
When should I get legal advice?
Legal advice is invaluable at every stage of setting up or managing a trust. You should seek professional support when establishing a new trust or appointing a trustee, as this ensures the structure is legally sound and aligned with your intentions.
If you’re acting as a trustee and are unsure about your responsibilities, expert guidance can help you navigate your duties confidently and avoid unintentional errors. Legal advice is also essential if disputes arise between trustees or with beneficiaries, or if there’s any suspicion of a breach of trust.
Similarly, changing or removing a trustee requires careful legal handling to ensure the process is valid and enforceable. Finally, trusts often have tax implications, so consulting a solicitor is crucial for effective tax planning and compliance.
At Eric Robinson Solicitors, our friendly, knowledgeable team is here to provide clear, practical advice every step of the way, giving peace of mind and protecting the interests of everyone involved.
Don’t hesitate to get in touch if you need guidance on any aspect of trusts or trustee responsibilities.
Conclusion
Being a trustee is a role of great responsibility. Understanding and fulfilling your legal duties under the trust and the Trustee Act (2000) is essential to protect the interests of beneficiaries and ensure the trust is managed effectively.
Whether you’re creating a trust, acting as a trustee, or facing a dispute, the right legal advice can make all the difference. Contact Eric Robinson Solicitors today for expert guidance tailored to your situation.
We have solicitor offices in – Southampton, Hedge End, Chandlers Ford, Winchester, Lymington and Richmond Upon Thames.
