Who is a trustee?

The role of a trustee

A trustee looks after assets that have been placed in a trust. GOV.UK describes the trustee as the person who manages the trust and is the legal owner of the assets. Even so, the trustee cannot treat those assets as their own. They hold them for the beneficiaries, under the rules set out in the trust document.

If you are new to trusts, it may help to start with our overview, what a trust is and why people use one.

Who can be a trustee?

Trustees are usually chosen by the person setting up the trust (the settlor), or named in a Will. They are often:

• family members or close friends
• the executors of a Will, where the Will creates a trust
• professionals, such as solicitors or accountants
• a trust company

Trustees should normally be adults with the mental capacity to make decisions. Many people choose at least two trustees, so that decisions are shared and the trust can carry on if one trustee dies or steps down.

What trustees have to do

Follow the trust document

The trust deed or Will sets out who can benefit and what powers the trustees have. Trustees must read it carefully and act within it.

Act in the beneficiaries’ interests

Trustees must put the beneficiaries first. They should not benefit personally unless the trust allows it, and they should avoid conflicts of interest.

Look after the assets with care

This can include investing money sensibly, keeping property insured and reviewing investments from time to time. Trustees can take advice from investment or legal professionals.

Keep records

Good records matter. Trustees should keep track of money coming in and going out, decisions they make and the reasons for them.

Deal with tax and registration

GOV.UK says that, as a trustee, you are responsible for reporting and paying tax on behalf of the trust. This may mean:

• registering the trust with HMRC’s Trust Registration Service
• completing a Trust and Estate Self Assessment tax return (form SA900) each year, where the trust has income or gains to report
• paying any tax due by the deadline

Where there are several trustees, GOV.UK says one should be named as the “principal acting trustee” to deal with tax, although all trustees remain responsible. You can read more in our guides to how trust income and gains are taxed and the Trust Registration Service.

A practical example

Sam and Priya are named as trustees in their uncle’s Will. The Will leaves a sum in trust for his granddaughter until she is 21. After the estate is settled, they open a trust bank account, register the trust with HMRC if required, invest the money and keep a simple log of every decision. Each year they check whether a tax return is needed. When the granddaughter turns 21, they pay out the money as the Will directs and close the trust.

Can a trustee be paid?

Family and friends acting as trustees usually act without payment, although they can normally claim reasonable expenses. Professional trustees will charge for their time. Whether a trustee can be paid often depends on what the trust document says.

Can you say no, or step down?

If you are named as a trustee, you do not have to accept the role. It is usually easier to decline before you start acting. Once you have taken on the role, stepping down can be more involved and may need the agreement of other trustees or a replacement. A professional can explain the process.

Trustees, executors and attorneys

These roles are often confused. An executor deals with someone’s estate after they die. A trustee manages a trust, which may last for many years. An attorney under a Lasting Power of Attorney makes decisions for someone who is still alive. One person can hold more than one of these roles, but each comes with its own duties.

When to get professional help

Trustees can be personally liable if they get things wrong, even by accident. It may be wise to speak to a qualified professional if:

• you are unsure what the trust document allows
• the trust holds property, a business or a large investment portfolio
• beneficiaries disagree or ask for money the trust may not allow
• you are unsure about tax returns or registration
• you want to retire as a trustee or appoint a new one

Always check a professional’s regulation and insurance before instructing them.

Next steps

If you would like to talk this through with someone qualified, you can read more about how we can help with trusts, or answer a few short questions in our trusts questionnaire. WillHarbour is an introduction service, not a law firm. With your permission, we share your enquiry with up to three suitable firms, which will explain their own fees and their referral arrangement with us before you decide anything.