What Does a Trustee Do in Probate?
25 March 2019
If a person has died leaving a Will which includes a Trust, then it will also usually name Trustees. These will be the people responsible for managing the Trust, and they will be required to act in the best interests of those who are set to benefit from it. We explain exactly what the role of Trustee entails.
What are Trusts and How Do they Work?
A Trust is a legal structure that can be included when making a Will and can provide additional protection for certain assets or certain beneficiaries. The named Trustees are legally bound to manage those assets in a certain way, for the benefit of the beneficiaries of the Trust and in line with the wishes of the person who made the Will.
There are a number of situations in which a Trust might arise in a Will. A Trustee (or Trustees) could be appointed in a Will if a beneficiary is under the age of 18, or if the Will stipulates that they shall receive their inheritance at some point in the future. This could be when they reach a certain age, get married or complete a qualification, for example. In these cases the Trustee will be responsible for taking care of the inheritance until the beneficiary receives their entitlement.
If there is a 'parental receipt clause' in the Will, then the parents of a minor beneficiary may receive the entitlement on behalf of the minor, however this is at the discretion of the Executors.
A Property Trust in a Will could be used to ring-fence a person's interest in a property. This could be used to prevent their share in the property from being swallowed up by their spouse's care fees after their death, for example. A Property Trust is set up to give someone a life interest in a property, meaning they can live in or earn an income from the property, usually for the rest of their life, but it would then be inherited by specific beneficiaries named in the Will when the life interest comes to an end.
Additionally, Discretionary Trusts can be set up in a Will which appoint Trustees to manage inheritance, often on behalf of vulnerable loved ones who require assistance. The Trustees usually have absolute discretion as to how much (or what asset) to give to beneficiaries and when. Beneficiaries of Discretionary Trusts have no absolute right to the assets within the Trust and the Trustees can decide not to make any distributions at all.
It is common (but not strictly necessary) for the same person (or people) to be appointed as both Trustee and Executor in the Will. While the role of Executor is quite commonly known, not everyone fully understands why a Trustee is named in a Will or what this role entails.
Ultimately, the Trustee will be responsible for managing the Trust assets in line with the terms of the Will and in the best interests of the Trust's beneficiaries.
If a Trust is established in a Will, there will usually be at least two named Trustees. There are two key reasons for this:
Firstly it's possible that any person you name as a Trustee may become unable or unwilling to act on your behalf when the time comesThe second reason is a legal one, because if the Trust contains property as an "asset of the trust" then there is a legal requirement (in most cases) for at least two Trustees to deal with the legal ownership of the property.
What Duties and Responsibilities do Trustees Have?
Trustees have a financial responsibility to act in accordance with the terms of the trust and to act fairly towards the beneficiaries, balancing each of their interests. There is also a duty of care under the Trustee Act 2000 to "exercise such care and skill as is reasonable in the circumstances."
Their main duties are as follows:
Act impartially – a Trustee must act in the best interests of all of the beneficiaries of the Trust.
Act with reasonable care and skill – all Trustees are required to act with reasonable care and skill. If a Trustee is a professional person, such as a Solicitor or accountant, then a higher standard of care will be expected of them than that of a lay Trustee.
Secure and enquire of Trust property – the Trustees must find out what assets are owned by the Trust and must make sure that such assets are kept safe. If money is owed to the Trust the Trustees may be required to recover such monies.
Review investments – Trustees are required to formally review any investments, at least once a year and take appropriate financial advice if necessary.
Keep records – to show that the Trust has been managed properly, the Trustees are required to keep records of what they do. The beneficiaries of the Trust normally have the right to see such documentation.
Keep all trust documents – including accounts, title deeds, share certificates and investments documents and make these available so that beneficiaries can have sight of them if appropriate.
There are a lot of responsibilities attached to the role of Trustee. This is not just in relation to the general work the Trustees have to carry out such as keeping records or signing documents on behalf of the Trust, but also in the decisions they make and the way they balance their responsibilities between the multiple interests.
A Trustee can be held personally liable if they act inappropriately concerning the administration of the Trust. For this reason, we would always recommend professional advice and support for the Trustees who are receiving and managing Trust property as part of the Probate process.