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Legal News | 29.02.24

The Powers and Duties of Trustees

Being a trustee is an important role and it is vital potential or current trustees are aware of their powers and duties.

Trustees must act in the best interests of all of the beneficiaries of a trust and ensure that their own interests do not conflict with those of the beneficiaries.

The Duties of Trustees

Trustees are responsible for safeguarding the trust’s assets and ensuring they are appropriately invested. They must ensure decisions about investments are consistently assessed and seek appropriate guidance at regular intervals.

The trustees must exercise their decision-making authority independently and ensure decisions are made in the best interests of all of the beneficiaries.  Sometimes this will involve weighing up the interests of different types of beneficiaries, for example those who have an interest in the trust’s income versus those who are due to receive the capital after the death of other beneficiaries.

The Powers of Trustees

Depending on the type of trust, the settlor (the individual who creates the trust) can grant the trustees flexible powers in the trust deed. The trustees can then use their discretion as to when to exercise those powers.

There are some common powers given to trustees:

  • Power of appointment: This is an express power and allows the trustees to appoint funds from the trust either directly to a beneficiary outright or onto an alternative form of trust such as a life interest trust (where the beneficiary would have a right to all of the income from those appointed assets). This would be executed by a Deed of Appointment signed by the trustees.
  • Power of advancement: This allows trustees to apply money or assets to a beneficiary for their advancement or benefit.
  • Administrative Powers: These powers are managerial and allow trustees e.g. to lend or borrow money. These powers will be set out in the trust deed.

If you are thinking of setting up a trust or you are a trustee and wish to get advice on how to manage assets of a trust please get in touch.

 

Posted By Our Wills, Tax, Trusts & Probate Team