MLR3C10535 - Trust or Company Service Providers (TCSPS): Introduction- Individuals and firms that act as professional trustees
The law relating to trusts is complex and this guidance provides only a basic summary sufficient for an understanding of what the role of a professional trustee is. There is further extensive coverage of trusts and trust law that is available on a number of internet sites (including HMRC) and it is recommended that you look at this material.
However the following provides a basic example.
A might give property to B to hold it for C
In this simple example:
- A is the Settlor
- B is the Trustee
- C is the Beneficiary
It is usual for the arrangement to be evidenced by a Trust Deed, a formal witnessed document that sets out the objects of the trust and names the beneficiaries.
A trust can be created during the settlor’s lifetime or on death. Trusts are often created by a will.
Settlors often wish to appoint professionals to act as trustees, in many cases to act alongside family members. This is because a specialist trustee will understand trust law and be aware of the duties of a trustee and how to discharge them. A professional trustee will also be neutral in his dealings with the beneficiaries and thus avoid the perception of bias that may arise with family trustees.
The duties of a trustee are to act in good faith and at all times in the best interests of the beneficiaries. A trustee must ensure that trust property is invested properly. They must maintain proper accounts which show how the trust assets have been invested, whether any distributions from the trust have been made to the beneficiaries and supply them to the beneficiaries when requested.