I have been appointed Trustee in a Will, what are my duties?

A Trustee is someone who holds property on trust for another – ie, a beneficiary. It is often the case that the Executors named in the Will are also appointed Trustees. It is usual practice to appoint at least two Trustees, when making a Will.

Who can benefit from a trust? 

A trust can be set up to benefit particular people or for charitable purposes. They are known as the ‘beneficiaries.’

Fiduciary duty / duty of care

All trustees owe what is called a ‘fiduciary duty’ to the beneficiaries. This means they have a ‘duty of care’ towards the beneficiaries and they must make sure there is no conflict between their own personal interests and those of the beneficiaries.

What type of trust is it and is there a trust instrument?

A Trustees’ duties will depend on what type of trust is set up. If there is an explicit trust instrument the Trustees’ duties are more specific. However, if a discretionary trust is set up then the Trustees have broader powers.

Trustees’ duties

In general terms, a Trustee has the following duties:

• To act impartially among beneficiaries
• To invest in a prudent manner
• To act in the best interests of the beneficiaries
• To not make a personal gain
• To account for their actions and keep the beneficiaries updated
• To act in accordance with the Trust instrument if one exists

Can a Trustee be paid for the work they have to do?

A Trustee can be paid for their work but only if this is expressly stated in the Trust deed. Often, deeds are drafted to allow for payment to trustees.

Trust set up for minors awaiting majority

One of the most common scenarios where Trustees are appointed in a Will is where there are minor children and their inheritance is to be held on trust until they attain a certain age, usually 18 or 21 years.

Discretionary Trust

A discretionary trust is where the entitlement of the beneficiary is not fixed but is decided by the Trustees on a discretionary basis. A trust deed will provide guidance to the Trustee as to how they should determine who the beneficiaries are and how much they should be given.

The Trustees are responsible for:

• Ensuring that the Trust Deed and the wishes of the ‘Settlor’ are strictly adhered to
• Informing HM Revenue and Customs that a discretionary trust has been set up
• Dealing with tax returns to HM Revenue & Customs
• Paying any income due to the beneficiaries
• Paying any tax due on the trust
• Keeping accurate financial records and minutes of meetings with beneficiaries
• Investments are to be made with due care and diligence
• Making loans and keeping records of any loans made to beneficiaries
• Providing the beneficiaries with confirmation of how much income they have received from the trust and how much tax the trustees have deducted as the beneficiaries may be able to claim the tax back.

Can a Trustee be paid for the work they have to do?

A Trustee can be paid for their work but only if this is expressly stated in the Trust deed. Often deeds are drafted to allow for payment to trustees.

What happens if the Trustee makes a loss following a bad decision?

In relation to liability, the Trustee is financially liable for any loss made following a bad decision to invest, for example. However, such a loss is limited to anything that is in excess of the trust property they hold.

When making a Will carefully consider who to appoint as Trustee

Acting as a trustee is an onerous task and carries with it a large amount of responsibility, especially, since they may be personally liable where things go wrong. When making a Will it is always best to choose trustees carefully and discuss matters with them beforehand to ensure they know what needs to be done and what their responsibilities are.