Appointing Trustees in your Will

October 01, 2020

Appointing Trustees in your Will

A “trustee” is a person who is legally responsible for assets held in a “trust”.

When a Will is drafted, it sometimes appoints Trustees as well as Executors. The role of Executor is to administer the deceased’s Estate, but the Trustees are there to manage any ongoing Trusts which arise from the Will.

Trustees may be appointed if a beneficiary is under the age of 18, in which case the Trustee will be responsible for taking care of their inheritance until they come of age. Alternatively, Trustees may be appointed to manage a Trust that has been set up as part of a Will and holds some (or all) of the Estate.

A “trust” is a legal arrangement used to protect assets, such as land, buildings or money for the benefit of the beneficiaries to the trust. The trustees are legally responsible for the assets in the trust , manage the trust and carry out the wishes of the person whose assets were placed into it (the settlor).

How should I choose who to appoint as a trustee?

The trustee’s job involves a fair amount of work and responsibility. A person cannot be forced to take on the role of a trustee. For this reason it is a good idea before appointing a trustee to check whether the trustee you choose would be willing and able to take on the role.

Trustees often have wide powers, for example when making decisions as to how to invest monies held under the trust. So it is important to appoint someone who is trustworthy, impartial and has some experience in dealing with financial matters.

They can be a family member or a friend or a professional person such as a solicitor or an accountant. A professional trustee is allowed to charge for their work and their charges will be deducted from the proceeds of your estate.

How many trustees should I appoint?

It’s always best to name at least two Trustees. This serves two key purposes.

  1. It’s possible that any person you name as a Trustee will become unable or unwilling to act on your behalf when the time comes so having two people is practical.
  2. The second reason is a legal one. If the Trust contains property as an “Asset of the Trust”, then there is a legal requirement that at least two Trustees act to deal with the legal ownership of the property.

 

Can I change the trustee/s?

Sometimes it will become necessary to change the trustee/s you have appointed. If you want to change them, you can do this by making a new will or by making a codicil.

What is a trustee responsible for if something goes wrong?

Being a trustee is a legal responsibility.

All that is required is to act in the best interests of the person the trust is for. This is called ‘fiduciary duty’.

If not, the trustee can be taken to court, and the penalties can be severe.

Also, if the trust can’t pay its debts or if trustee/s don’t take reasonable care in making a decision that loses money for the trust, they can be liable as trustees.

What happens if a trustee isn’t appointed or my trustees refuse to take on the role or all die before me?

If you don’t appoint a trustee or your trustees refuse to take on the role or all die before you then the Court will appoint will appoint a trustee or trustees to manage the trust.

If you’re asked to be a trustee

If you’re asked to be a trustee, think carefully about whether it’s right for you.

Being a trustee can really help someone important to you. If someone asks you to be a trustee, it usually means they trust you to do the right thing for them and the beneficiaries of the trust.

It’s a lot of work and responsibility, and you might end up being liable for losses made by the trust if you don’t carry out your duties properly. Some trusts can take a lot of your time to manage properly. As a trustee you usually won’t be paid, or get any benefit yourself. You’ll be carrying out your duties as a trustee for the benefit of others.

Being a trustee is a long-term commitment. Some trusts have a set end-point. For example, when a child turns 18, but others can go on for up to 125 years! You could be a trustee for decades in some cases.

You must agree with all of the other trustees when making trust decisions. So it’s worth understanding who they are and deciding if you think the relationship will work.

Remuneration

Administering a trust can be a complex and time consuming process. This is particularly true for lay trustees who may not appreciate the extent of the responsibility which comes with the role.

Consideration should be given (prior to accepting the position) as to whether the trustee will be entitled to remuneration for their services. In this respect the approach taken towards professional trustees differs from that taken to a lay trustee.

Professional Trustees

The Trustee Act 2000 allows express charging clauses to be incorporated into a trust document, where the trustee is a trust corporation or is acting in a professional capacity. This is unless the trust instrument makes inconsistent provision.

Where an express charging clause operates, the trustee is entitled to receive reasonable payment out of trust funds even if the service could have been provided by a lay trustee.

If there is no provision as to entitlement of fees in the trust deed, then a trustee who is a trust corporation (but not a trustee of a charitable trust) may receive reasonable remuneration from the trust. Additionally, a trustee acting in a professional capacity (but who is not a trust corporation, a trustee of a charitable trust or a sole trustee) is also entitled to fees as long as each other trustee provides their agreement in writing.

 

Lay Trustees

The general position is that a lay trustee (i.e. someone who accepts the role on a non-professional basis) is not officially entitled to remuneration.

Excelsior is available to help you with these difficult decisions and we welcome any queries or concerns you may have. Feel free to contact us.

Free advice is available by text or email.

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