Your choice of who will be the trustee for your Trust is possibly the most important one you will make. The person or company with control over your assets can also very easily control how they are used – both in your lifetime and after your death if you don't have a Will. The trustee can also stop your children from getting their inheritance if they don't do as the trustee demands.
If you want to make a Will, it makes sense to have a properly drawn-up Trust as well – this way, you know that everything has been done properly and nothing will go wrong after your death. Here we will look at how to choose a trustee and what you need to think about.
Who do I want as my trustee?
Before choosing someone as your trustee, they must be suitable for the position. They need to be someone who will act fairly – they should not look after their interests rather than the beneficiaries of the Trust.
As your trustee, they will be able to sign cheques and enter into contracts on behalf of the Trust. Because of this, you want someone who is trustworthy and can be strict when necessary. If there are younger beneficiaries involved, you will need to make sure that the trustee is old enough to handle this responsibility.
It can help if your trustee already knows your family and its circumstances. This way, they can be as helpful as possible as soon as they are appointed trustees. Also, they must live in the same country as you.
What are the responsibilities of a trustee?
As a trustee, it is your job to make sure that all beneficiaries receive their share of the Trust assets according to the wishes set out in the Trust Deed. You will also need to take care of any administration or paperwork yourself, including things like tax returns. This can make sure that your Trust doesn't run into any problems with HMRC.
The trustee will also have to manage the assets of the Trust during the lifetime of the beneficiary. Any money that is not needed for current expenditure should be saved or invested. It would help if you remembered that this could be considerable sums over time, so you are looking at long-term commitment.
It may seem like a lot of responsibility, but your trustee won't be expected to do everything themselves. It is their job to appoint other people or companies who can help them manage the Trust – this could be an accountant or an investment advisor, for example.
The trustee should also keep proper records and accounts of what they have done on behalf of the Trust and keep these safe. This is to ensure that everything they do can be checked by your beneficiaries later.
How many trustees should I choose?
There should always be at least two trustees – acting together; they can make sure that there will never be any disagreements over how money should be used. This also means that if one trustee cannot act, the other can carry on without them.
However, it is unnecessary to have more than two trustees – so you don't need to worry about this unless you want to. If there are only two trustees and they disagree on a decision, or if there is a disagreement with a beneficiary, it can be very difficult for anyone to resolve the problem.
If you do want more than two trustees, you should remember that this may take up a lot of time – all your trustees will likely need to get together at regular intervals to monitor how everything is going. This may not be practical if the trustees don't live near each other or have busy lives – so be careful about how many trustees you choose.
Can I have a corporate trustee?
In England and Wales, it is possible to use a corporate trustee, such as a limited company, for your Trust. This means that the directors of the company will become the trustees of your Trust. There are many advantages of corporate trustees:
Firstly, the directors can then act as individual trustees if, for any reason, one or more cannot be involved.
If you choose a company such as a bank, it may even save on administration costs because the company has staff who are used to dealing with Trusts. You can also make sure that your trustee's financial situation is checked before you appoint them – this will make sure that they can cope with the responsibilities involved.
If a corporate trustee isn't what you had in mind, you should still consider using a company or a charity to be a trustee. They may not have some of the advantages of a limited company. Still, they could offer other benefits – for example; the trustees might live in the same area as your beneficiaries.
There are many advantages to using a corporate trustee, but you should make sure that they are suitable for what you want them to do. You can ask them questions or request information about their services before making a decision – this is probably best done by highly professional Trustees, as they know what you might need to know.
