Are your Trustees equipped to deal with the duties and responsibilities placed on them?
Trusts can offer great flexibility. They allow property to be ring-fenced; placing it in the hands of trustees who have wide powers to deal with it for the benefit of the named beneficiaries. They can be used to mitigate tax and to protect assets from third parties who might have claims over it. In most cases such trusts function perfectly, with the trustees fulfilling their obligations to the satisfaction of the beneficiaries in whose benefit they act.
However, on occasion the relationship between trustee and beneficiary can break down. It is therefore essential that trustees, beneficiaries and those creating trusts understand the nature of what has been created and in particular the duties and responsibilities of the trustees on the one hand and the rights of the beneficiaries on the other.
The provisions governing these duties and rights are often contained within the trust instrument itself (be it a Deed or perhaps in a Will) but the law also provides for certain of these under statute, including the Trusts of Land and Appointment of Trustees Act 1996 (TLATA). As an example, under section 11 of TLATA the trustees must wherever practicable consult the beneficiaries of full age concerning the exercise of any function relating to the land and so far as their wishes are broadly in line with the purpose of the trust, give effect to those wishes. Trustees are also under a duty to produce accounts for the beneficiaries to examine.
It is vital when considering setting up a trust to ensure that your Trustees are informed of their responsibilities and can be trusted to carry out their duties and exercise their discretion within the spirit of your wishes. A side letter is often a useful addition to a trust document and provides an opportunity for the donor to tell the trustees what their intentions for the trust are. Advice should be sought regarding this specialist area of law.
Contact David Farr at kenneth elliott + rowe solicitors (www.ker.co.uk) for further information. Telephone 01708 757575 or email firstname.lastname@example.org