The role of a trustee can go on for many years as the whole intention generally of a trust is to look after property and money in the long term. For example, a trust legacy can run for a whole lifetime of a beneficiary; perhaps a spouse and after they die it gets passed over to another individual; such as a child who may be too young to inherit directly so essentially a trust situation continues on for many more years until the child becomes an adult. In this instance, the trust keeps going on and on for years and years running into decades.
Since the trusty duty is often such a long term affair it is common for trustees to retire, die or decline to do it anymore. When this happens, it is essential that a replacement is found who is pleased to take over. Sometimes a retiring trustee might need the other trustees, the beneficiaries or on some occasions an English or Welsh court to agree to it first. Trustees are allowed under English & Welsh law to appoint a replacement trustee; however, the acceptance of their choice may be required by the beneficiaries first. Other times the English and Welsh courts decide or select the replacement trustee.
Whether a trust is set up by a deed or within a Last Will Testament the trustees are the ones who look after and run the trusts. A grantor or testator will write out their trust wishes and instructions and it will be the job of the trustees to act upon these.
Trustee duties generally require a relatively high level of skill, ability and knowledge in order to cope with the expectations of the job. The trustees’ responsibility involves managing all the property in a trust; be it money, shares, a car, a house or whatever. They need to protect this property from damage or losses. They will be accountable for collecting in any funds owed to the trust and any ongoing income payable to the trust. For example, investments created and held within the trust may accrue profits; it would be their job to make sure these are collected. They would be expected also to make decisions regarding these investments, plan and enact the reinvestment of trust profits and entrusted hopefully to make the investment fund and correlating income grow. They are also held responsible for paying any bills, expenses and costs due against the trust property and trust fund. As you may begin to tell this is not necessarily an easy feat for the general lay person.
It is the trustee’s duty to calculate taxes, complete HMRC forms, sort out funds and ensure that any tax due on any form of trust income is properly declared correctly and paid. This will include taking care of ongoing income tax on trust property incomes; capital gains tax due on the trust fund assets typically arising when assets are being disposed of, tax on investments and any inheritance taxes due. The trustees are accountable for all these things.
Trust property is allocated by a settler or executor to a trustee or trustees to hold on to. It is their duty to take care of these assets for the benefit of the named beneficiaries and do so in ways that are in the best interests of those beneficiaries. Who ever the beneficiaries are the appointed trustee or trustees have a responsibility to treat all of them fairly.
Frequently the beneficiary of a trust is a child. Often the benefactors’ own child, grandchild or even great grandchild. The trustee is the one that controls what is being spent on the child in question. If a guardian is appointed as sole trustee then this would give them sole discretion over the expenditure of the trust. Even though you may trust them implicitly with the care of your child it is not usually wise to give them complete control of the trust fund. This is because it’s too tempting and easy for them to use it more to cater for their needs than those of the child. Thus, often a different person is named as a trustee instead of them or alternatively a second trustee is appointed to manage the expenditure of the trust in conjunction with them.
Pursuant to the above it is the trustees’ job to manage the child’s inheritance on behalf of the child in accordance with the provisions and terms written in the trust document. The specified conditions can spell up out how the money is utilised and spent for the well being of the child; perhaps for example how it is spent on schooling and education. Any money not expended during the life of the trust is to be invested until the child eventually comes of age at which point under the Welsh & English laws they are entitled to inherit the remainder of the trust property in their own right and the trust gets terminated.
As well as the tasks referred to above a trustee would also simultaneously be expected to carry out their actions inline with fulfilling the wishes of the settler or testator as laid out in the trust agreement or Last Will and Testament. In much the same way as an executor and executrix they would be responsible for the distribution and administration of trust assets to the selected trust heirs in accordance with the instructions given in the trust deed or Last Will and Testament.
The amount and type of responsibility that a trustee(s) will have has a dependence on the type of trust used. For example, with a discretionary trust the trustee has the responsibility for deciding when to make payments and how much to pay to the beneficiaries. In other words this choice it is left to their discretion and so are all matters involving managing and distributing the trust property. With an English or Welsh bare trust the trustee or trustees responsibility is far less since if the beneficiaries are adults they hold the power to decide how and when to use trust capital and any related incomes. The trustees will not have to worry about declaring and paying any tax due as this becomes the beneficiaries’ responsibility.