What are my Duties as a Trustee?

What are my duties as a Trustee?

Acting as a Trustee is a big responsibility, both legally and morally.

There will be changes to Trustee responsibilities when the Trusts Act 2019 comes into effect on 30 January 2021.

It’s imperative you know and understand your duties under the new Act because they’re now codified in law and must be adhered to.

Don’t worry, we’ll summarise and make it simple to understand;

There are 4 main sections:

Whether you’re already familiar with your duties and just need a refresher, or really need to gain an understanding, this article will give you valuable insight.

1) Mandatory Duties

Regardless of what the Trust Deed says, there are mandatory duties that apply.

You’ve probably already been acting appropriately but it doesn’t hurt to refresh these expectations, so they are forefront of your mind.

What are Mandatory Duties?

As a Trustee, you must:

  • Know the terms of the Trust
  • Act in accordance with the terms of the Trust
  • Act honestly and in good faith
  • Act for the benefit of beneficiaries or to further the permitted purpose of the Trust
  • Exercise powers for proper purpose

These are the minimum standards.

Just remember, these duties apply no matter what the Trust Deed states and cannot be modified.

2) Default Duties

Default duties apply unless they are specifically excluded or have been modified by the Trust Deed.

Note: These duties are unlikely to have been modified as they are best practice.

However, if you pay a Trustee it may be appropriate to make a modification to the duty Not to Act for Profit and Act for no Reward if for example, the trust employs the services of a Professional Trustee.

Here is a list of the Default Duties

  • General duty of care
  • Invest prudently
  • Not exercise power for own benefit
  • Consider exercise of power
  • Not to bind or commit Trustees to future exercise of discretion
  • Avoid conflict of interest
  • Act impartially
  • Not to profit
  • Act for no reward
  • Act unanimously

The Trust Deed must be modified to explicitly account for modification or exclusion of any of the above duties.

3) Keeping Records

The Trusts Act 2019 requires Trustees to keep copies of core documents.

Which documents are considered core documents?

  • The Trust Deed plus any variations
  • Trust minutes
  • Accounts and other Trust documents

4) Basic Information

Beneficiaries must now be notified of Basic Trust Information.

There is now an obligation to Trustees to provide Beneficiaries of basic information.

What kind of information is considered basic information?

  • The fact that they are a Beneficiary
  • Details about who the Trustees are
  • Beneficiaries also have the right to request a copy of the Trust Deed

But that’s not all;

Beneficiaries also have the right to request other information pertaining to the Trust.

Trustees don’t have to automatically grant these requests however they must be considered based on factors set out in the Act.

Conclusion:

Being a Trustee has both moral and legal obligations.

If you would like to understand more about the Trusts Act 2019 or if you have particular questions regarding your own Trust, we can help.

Be aware that the new Trusts Act may have implications for your Trust and that the date for compliance is 30 January 2021.
Book an appointment with us today and ensure everything is in order!

Disclaimer: This article provides a brief overview of Trustee Duties for educational purposes and is of a general nature only. It doesn’t constitute legal or professional advice specific to your particular circumstances. As a Trustee, it’s imperative that you understand your duties and are willing and able to continue acting as a Trustee.