Wills & Probate

Trusts and Estate Planning

What is a trust?

Instead of transferring the family home outright it is worth considering the alternatives such as wills and lasting powers of attorney. However, the primary alternative to an outright gift, if you decide that you do wish to transfer your property, is the flexible life interest trust, or more commonly known as a ‘family trust’.

‘A trust’ is a relationship which is recognised and enforceable in the courts. Its details are contained in a ‘trust deed’ which is rather like a rule book.

Speak to one of our team for some free initial advice about trusts and estate planning at our offices across Lincolnshire & Nottinghamshire, in Boston, Grantham, Lincoln, Newark and Sleaford.

What are trustees?

Where there is a transfer of a home into a family trust then that property becomes ‘the trust fund’. It is put into the names of persons called ‘the trustees’. The trustees have certain powers over the handling of the trust fund for the benefit of ‘the beneficiaries’ named in the trust deed. You may be a trustee but that is not recommended. It defeats the objective of passing on responsibility properly.

Beneficiaries can be trustees but sometimes this can create a conflict of interests. You will need to choose your trustees. A minimum of two and maximum of four should be chosen. It is vitally important that you choose your trustees wisely. The trustees have certain discretions although they must act in accordance with the trust deed.

What must the trustees do?

Trustees do not have any power to go beyond the terms of the trust deed. Most things which a person would want to do with his own money can be done by the trustees for the benefit of the beneficiaries.

For example, at an appropriate time the trustees can, upon taking appropriate advice, open and operate a trust bank account, invest money, buy and insure property and purchase help and assistance for the beneficiaries. The Standard Provisions of the Society of Trust and Estate Practitioners are also used in the trust deed. They provide provisions necessary for the administration of the trust.

What are the duties of the trustees?

Trustees must:

  • Disclose any circumstances where they might have a conflict of interest with a beneficiary. If a beneficiary owes a trustee money this should be disclosed.
  • Not act in conflict with the interests of the beneficiaries or profit from their role as trustee.
  • Ensure they know what the terms of the trust are and that they are carried out.
  • Ensure that they do not act beyond the terms of the trust and their powers given by it.
  • Ensure that good trust records and accounts are kept and that any tax due is paid on time.
  • Take independent financial advice at appropriate times. This does not preclude the use of common sense. The trustees must also ensure that the advice taken is in accord with the Trustee Act 2000. The ultimate decision over what to invest in is the trustees’ decision. It cannot be delegated.
  • Act impartially and fairly between multiple beneficiaries and those who are beneficiaries now and those who will be in the future.
  • Take reasonable care. Professional trustees must take more care than others.
  • Act jointly. Trustees should not normally delegate functions to each other. Trustees are jointly liable for mistakes and should therefore act together.
  • Not charge fees. Only professional trustees can claim more than their out of pocket expenses.
  • Ensure the beneficiaries are kept fully informed. This avoids disputes.

These are onerous responsibilities. That is one reason why at least one professional trustee is often appointed.

We can help

Trusts and Estate Planning can be a very complex process and one model doesn’t fit all. We will go the extra mile for you, and take away any stress or burden in the process, to make it as simple and straight forward for you, whilst ensuring your wishes are met.

For further information contact the team at your nearest Ringrose Law office in Boston, Grantham, Lincoln, Newark and Sleaford.

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    Nerina Farmer TEPDirector & Solicitor
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