What is the role of a trustee?
A trustee is an individual or organisation responsible for managing assets placed in a trust for the benefit of someone else (the beneficiary). This role carries a fiduciary duty, meaning the trustee must prioritise the beneficiary’s best interests above their own and adhere to the terms outlined in the trust document.
Trustee roles and responsibilities
The key roles and responsibilities of a trustee include:
Managing trust assets
The trustee holds legal title to the assets within the trust and is responsible for their administration, investment, and distribution. This includes safeguarding assets, ensuring they’re used only for the trust’s purposes, and potentially generating income or growth, according to the trust’s terms.
Following the trust document
The trustee must meticulously follow the instructions and restrictions laid out in the trust deed or will. This determines how assets are to be used, distributed, and who the beneficiaries are.
Acting in the best interests of beneficiaries
This is the paramount duty. Trustees must make decisions that benefit the beneficiaries, even if their personal interests conflict with those of the trust.
Maintaining Impartiality
If there are multiple beneficiaries, the trustee must treat them fairly and balance their potentially competing interests.
Record Keeping and Reporting
Trustees must maintain detailed and accurate accounts of all trust transactions and, depending on the trust type, may need to provide regular reports to beneficiaries and/or regulatory bodies.
Making Decisions
Trustees are empowered to make decisions about trust assets, including investments, distributions, and other actions, in accordance with the trust’s terms and always in the best interests of the beneficiaries.
Potentially Seeking Professional Advice
Trustees may need to consult with legal or financial professionals, especially for complex trusts or investments.
Important Considerations for Trustees
As a Trustee’s role comes with significant responsibility, it is important to bear in mind the following:
- Liability: Trustees can be held personally liable for breaches of trust, mismanagement of assets, or failing to act in the best interests of the beneficiaries.
- Time Commitment: Depending on the complexity of the trust, the role can require significant time and effort.
- Compensation: Most trustees are volunteers, but professional trustees or situations explicitly outlined in the trust document may allow for reasonable compensation.
In essence, a trustee is a responsible steward of assets, tasked with upholding the wishes of the trust creator and ensuring the well-being of the beneficiaries.