In 2001 the Trustee Act 2000 came into force for trusts established under English Law. Trustees have a legal requirement to understand and take into account this legislation.
The act requires and imposes a Duty of Care on the trustees to legally ensure the trust arrangement is operated in a suitable way. It is especially important for trustees to ensure that the duties imposed upon them by law or the terms of the trust deed are carried out.
Failure to effectively administer the trust could create a breach of trust. If a breach of trust occurs the beneficiaries could opt to take legal advice against the trusteeship and seek financial compensation.
Typical breaches of Trust include:
Responsibility of trustees
Trustee’s responsibilities fall into a number of categories:
1.Duty of Care. Trustees are required to act in the best interests of the beneficiaries and the trust arrangement.
2.Standard Investment Criteria. This places a responsibility on the trustees to ensure that the assets held within the trust are invested in a suitable and appropriate manner.
3.Delegation of duties. This power allows trustees to delegate certain tasks in relation to trusts. It does not absolve the trustees for their responsibilities, but might help with the operation of the trust.
Specific Trustees Duties
Under the Trustee Act 2000 the trustees have specific duties that they should ensure are carried out. These include:
The act replaced existing powers set out under the Trustee investment Act 1961 with a wider general power of investment. For trusts that do not have wide powers of investment the Trustee Act 2000 provided wider powers.
There are a number of exceptions from the Trustee Act 2000. These exceptions include trusts that are set up under Occupational Pension legislation, Authorised Unit Trusts and some trusts set up under the Charities Act 1993.
The requirements placed on trustees can be onerous and time consuming. We can help guide you through the complexities of the trustee act and help you comply with your trustee responsibilities.
Over the month weeks and months, we are looking to improve the personal finance portal (PFP) for our clients. The first stage is to introduce a live chat, audio and video service whilst clients are logged into PFP. This is the first level of improvements we will be making over the coming months. The live chat service is safe and secure.
Quite often friends and clients ask me about the best pension plans and I can understand. Pensions are complicated, even more so since Pensions Freedoms came into play.Successive Governments have tinkered with the pension rules and regulations time and time again. I started in the Financial Services Industry in 1984 and I can say each year the government has made some sort of change. Sometimes for the better or worse, but usually it adds another layer of complication. Terms such as Lifetime allowance, Fixed Protection, Capped and Flexi Access Drawdown are technical terms that generally confuse the public.In its simplest form a pension is a savings contract with tax breaks written under pension rules.
“The market hates uncertainty” has been a common enough saying in recent years, but how logical is it? There are many different aspects to uncertainty, some that can be measured and some that cannot. Uncertainty is an unchangeable condition of existence. As individuals, we can feel more or less uncertain, but that is a distinctly human phenomenon.
Rather than ebbing and flowing with investor sentiment, uncertainty is an inherent and ever-present part of investing in markets. Any investment that has an expected return above the prevailing “risk-free rate” (think T-Bills for US investors) involves trading off certainty for a potentially increased return.
Consider this concept through the lens of stock vs. bond investments. Stocks have higher expected returns than bonds largely because there is more uncertainty about the future state of the world for equity investors than bond investors. Bonds, for the most part, have fixed coupon payments and a maturity date at which principal is expected to be repaid. Stocks have neither. Bonds also sit higher in a company’s capital structure. In the event a firm goes bust,
bondholders get paid before stockholders. So, do investors avoid stocks in favor of bonds as a result of this increased uncertainty? Quite the contrary, many investors end up allocating capital to stocks due to their higher expected
return. In the end, many investors are often willing to make the tradeoff of bearing some increased uncertainty for potentially higher returns.