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Since the introduction of the Trustee Act 2000, trustees now have specific responsibilities concerning the servicing and administration of trust funds. The duty of care applies to professional and lay trustees. However higher standards are expected from professional trustees.
A statutory duty of care applies to the trustee investments that are held. For new or existing trusts, the trustees must take into account the trust’s objectives and the suitability of the investments to be held.
Trustees have a duty to protect the value of the trust fund, whilst providing income for the beneficiaries. It is important for trustees to consider the suitability of the trustee investments held, funding, the type of trust arrangement and the requirements of the beneficiaries.
A diversified portfolio of assets should be used to meet the trusts specific objectives.The aims could be to provide Capital Growth, Income or a combination of both.
This approach can help to reduce the risks of the trustee investment by investing across various asset classes. It is important to take into account risk and any specific requirements from the trustees. This could also include the need to invest in an ethical or sociably responsible manner.
Trustees have an administrative duty to review the assets held within the trust on a regular basis. This can be a time-consuming and lengthy process, especially if the trust administrators are not experienced investors.
It is important to seek independent and impartial advice on the assets held within any form of trust arrangement. We regularly advise new and existing trustee's on suitable asset allocation investment strategies.
Trustees often engage the investor services of a bank or stockbroker. Sometimes the service is not specific to the needs of the individual trust. A “one size fits all” approach may not take into account the individual needs of the investor's. For example, the requirements of a large educational trust would be different to a small family trust or a business trust.
The costs to administer the fund's are an important factor. The admin fees charged by banks and stockbrokers for trust investment management can be high. This can impact on the returns the trust can achieve.
Our investment process takes into account the costs of investing, as this is a known factor when we recommend specific investments.
If you are considering a trustee investment it is important to remember that the value of the investment and the income generated could fall as well as rise. There is no guarantee you will get back more than you invested.
If you are looking for advice on trustee investments please contact us.
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