If you are a trustee, it is your duty to act on behalf of the beneficiaries and according to the trust deed. If you are unsure about your responsibilities, we are here to assist you.
What are the legal duties and responsibilities of a trustee?
A trustee is under the absolute obligation to act in accordance with the terms of the trust and do so in the best interests of trust and its beneficiaries. If you are a trustee, you have following responsibilities:
Ensure you fully understand the terms and conditions of the trust deed
Act in the trust's best interests
Not pay yourself any fees or expenses if not explicitly stated in the trust deed
Fulfil your fiduciary and statutory duties
Keep accounts
Provide information about the trust to beneficiaries, and to act impartially between beneficiaries (one must not gain at the expense of another, for example)
Ensure you keep up to date with changes in tax rules and trust laws
What powers does a trustee have?
The powers a trustee will have can vary slightly as these will be set out by the trust deed as well as the law itself. In general, however, a trustee will be able to:
Pay, transfer or lend funds to beneficiaries
Invest
Manage land
Delegate certain tasks to agents, nominees or custodians
Make advancements in capital to beneficiaries (often for education or medical needs)
All trustees have a ‘fiduciary duty’ to beneficiaries; this means that any act taken by a trustee must be in the best interests of beneficiaries and done so with good faith.
What happens if a trustee does not comply with their duties and responsibilities?
If a trustee fails to comply with their duties and responsibilities as set out by the trust deed, the beneficiaries of the trust can ask them to voluntarily step down or apply to the court to have them removed. It is also possible for the court to instruct a trustee on how to properly administer the trust if they deem that to be more appropriate than removal. Examples of breaches in trustee duties can include:
A failure to properly invest trust assets
Incorrectly distributing trust assets between beneficiaries
Using trust assets for personal gain
Ignoring any conflicts of interest
Neglecting to take proper care and attention when dealing with the trust
Penalties for mismanaging a trust can be more severe than simply being removed as a trustee. If a court believes a trust has made a gain through their actions, or that beneficiaries have suffered a lost, trustees can be required to compensate the trust and account for any profit they have made.
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What happens if trustees disagree on how they manage a trust?
While all trustees are required to act in the best interests of the beneficiaries, there can be disagreements as what actions should be taken to achieve this. As most trusts require unanimous decisions from trustees, any disagreements must be handled through legal means, often involving an application to the court to settle the matter.
Our expert trust solicitors have a wealth of experience in handling trustee disputes and can help you resolve matters quickly and effectively. From examining the trust deed and providing tailored legal advice, to representing you in discussions with other trustees, we’re here to help when you need us.
Why should I consider legal assistance with my duties as a trustee?
If you don't act in accordance with the Trust or for the benefit of the beneficiaries, you can be held personally liable. This is why we advise you to work with an expert solicitor to stay legally safe.
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Frequently asked questions about trustee duties and responsibilities
What does it mean to have a ‘trustee duty of care’?
A trustee’s duty of care requires all trustees to act in the best interests of the beneficiaries, making every attempt to avoid causing any loss through inaction, negligence or mismanagement. It means that there is an expected standard of behaviour and competence that must be adhered to.
Can a trustee also be a beneficiary of a trust?
Yes, they can. This can be a common situation in cases where trusts have seen set up to support family members. However, it’s important to ensure there is no conflict of interest between their role as a trustee and their position as a beneficiary; a trustee must treat every beneficiary equally and not act out of self-interest.
Can a solicitor be a trustee?
Yes, you can appoint a solicitor or other qualified professionals as a trustee. There can be benefits to this; for example, an expert trusts solicitor will have in-depth knowledge about the operation of trusts, and it can in some case (though not all) be easier to avoid conflicts of interest.
What can beneficiaries do if they disagree with how a trust is being managed?
If the beneficiaries of a trust are concerned about how the trust is being managed, they may ask the trustee in question to voluntarily step down from the role. Alternatively, they could apply to the court to have them legally removed as a trustee.
Importantly, if a beneficiary believes that a trustee’s actions has caused them a loss, they could also apply to have the trustee reimburse the trust.
Very pleased with the service I received from Slater and Gordon. All actions required were carried out in a sympathetic and efficient manner. Clarification of requirements were indicated in a clear and precise detail with good communication. Mr S, Lancashire (wills, trusts & probate case)
I am thrilled with how fast my Grant of Probate was dealt with and how lovely everyone was. I would highly recommend their services. Mrs E, Manchester (wills, trusts & probate case)
My lawyer was very helpful at all stages of the process. She explained things clearly and was very flexible and helpful in dealing with my challenging personal circumstances. I would highly recommend. Ms G, Lancashire (wills, trusts & probate case)