I’m a trustee- what are my responsibilities?

The trustee act 2000 became effective in England and Wales on the 1st February 2001.

It replaced the previous act called the trustee investment act 1961.

One aim of the new act was to grant trustees wider powers in terms of the investments they are able to make. However the act also placed a greater level of responsibility and a duty of care on trustees.

This duty of care was introduced to protect against the possible misuse of these powers. The statutory duty of care helps protect the interests of the beneficiaries.

Each trustee will have responsibilities in relation to the trust. These will include:

• The requirement to regularly review the investments held within the trust. The trustees usually decide the frequency of any reviews. We would normally recommend every twelve months. However larger trusts might require reviews more frequently.
• Trustees should seek professional advice if any variations of the investments held are to be implemented.
• The investment adviser should be appropriately qualified to provide the advice.
• Trustees should consider whether the investments held within the trust are suitable. This should include diversification of risk and whether any ethical investment or sociably responsible investment strategies should be used. Other factors such as the type of trust, taxation of the underlying investments, costs of administration, the tax position and risk profile of trustees and beneficiaries along with the level of knowledge and expertise the trustees have on investing should also be taken into account.
• To understand the aim of the trust and to act in the best interests of the trust and the beneficiaries

Seeking professional advice

The Trustee Act 2000 placed a responsibility on trustees in terms of the suitability of the investments held.

Although it is not necessary for trustees to seek independent advice, it could be considered practical to do so.

Sometimes it is not practical to do this for example if the size of the trust is small and the costs of the advice would outweigh the benefits.

All financial advisers should be authorised and regulated by the Financial Services Authority (FSA). The FSA provide a register of every financial adviser in the UK. You can find the register at www.fsa.gov.uk.

An independent financial adviser is able to act on behalf of the trustees, rather than being tied to one or a small number of product providers.

At Consilium Asset Management we can provide practical and helpful advice to trustees. If you would like to find out more about our service for trustees please contact us.