If you are a trustee of a charity or any other form of trust then you will have certain responsibilities to ensure the terms of the trust are adhered to. Your responsibilities can be split into a number of areas. These are:
The Trustee Act 2000 also introduced additional requirements on Trustees. The Act requires trustees to abide by a duty of care. The aim was to provide a safeguard against any potential misuse of the trustee’s powers.
The duty of care requires trustees to exercise due care and diligence. Trustees must take into account their experience and knowledge they might have. This means that there is a higher duty of care for professional trustees (for example an accountant, solicitor or investment manager) when carrying out the trustees duties.
The Trustee Act 2000 outlines a statutory duty relating to Trustee Investments, unless the trust has outlined specific provisions with the Trust deed. Trustees are required under the Act to ensure that any existing or proposed investment is suitable.
The trustee act 2000 placed additional responsibilities onto trustees to ensure that the trust investments are suitable and are diversified. As a consequence trustees should consider independent financial advice when reviewing the trusts investments.
Dependent on the size of the trust or the trustees experience the trustees might consider it unnecessary or expensive to obtain this expertise.
A new power of General Investment was introduced to help with trustee powers. Unless the trust has specific restrictions stated in the deed (and it was created after 02/08/1961) trustees can make any investment with the exception of land.
As a consequence any existing or proposed investments held in trust should meet the standard investment criteria. Trustees are required under the Trustee Act 2000 to regularly review the suitability of trust based investments. The trustees can decide the frequency of reviews, but we would recommend that a review is carried out at least annually. For larger trusts the trustees might consider reviewing the trust assets on a more frequent basis.
Within the Trustee Act 1961 certain rules put restrictions on trustees, where the trust itself did not clarify any wide investment powers. The Trustee Act 2000 replaced the rules within the Trustee Act 1961.
If trustees require professional advice they should ensure that the appointed adviser is appropriately qualified. They should also be regulated by the Financial Services Authority.
Although it is not a requirement the trustees should consider using an Independent Financial Adviser as opposed to a tied adviser such as a bank, building society or direct sales force adviser.
This will ensure any advice given is impartial and independent.
Considerations needs to be given to the trust aims, investment diversification, costs, risk profile of the trust fund in addition to several other aspects. Other considerations would include the investment requirements of the trustees and beneficiaries, whether an ethical or sociably responsible investment strategy should be used, the tax position of the trust and the underlying tax position of the investment held within the trust.
When trustees consider make or reviewing any trust based investments they need to take into account their duty of care in addition to whether the investment is appropriate. If the trustees do not have sufficient knowledge they are expected to appoint an adviser that can provide this service.
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.