Lay or professional trustee: which should be chosen?

The management of a trust’s funds and assets can be daunting task. A long list of administrative processes and regulations accompany the role of trustee – along with duties such as investing funds and advising members of developments regarding their trust – and their own responsibilities.

One of the most important requirements of the trustee is to be a fair and impartial third party in all aspects of a trust’s management and protect the interests of a scheme’s beneficiaries over its lifetime. With those things in mind, the appointment of a trustee or board of trustees is crucial – many settlors opt to appoint family members or close friends to the position but in situations where impartiality is a necessity, a professional trustee may be able to perform those duties more capably.

What does being a trustee involve?

Many people underestimate the demands of managing a trust. While a family member or friend may be suitable for smaller trust arrangements, larger schemes, involving more complex regulation can be confusing for the untrained. Professional trustees offer a wealth of financial expertise and knowledge, drawn from a range of backgrounds and may be able to oversee a trust more efficiently and more successfully than a lay-trustee.

General duties of a trustee involve:

  • Understanding the terms of the trust – a basic requirement for administering the plan in accordance with the original trust deed.
  • In maintaining the trust, trustees must be aware of any administrative costs or tax payments due.
  • Trustees must be available to advise and inform beneficiaries on all aspects of the arrangement.
  • Finally, a trustee should be able to manage the trust in a way which maximizes its potential, taking advantage of any investment opportunities to allow its assets to grow. Conversely, a trustee should always act in a way which avoids loss.

Using trustees with close personal links to a trust can backfire in situations where an unbiased perspective is called for.  Family members, as trustees, may be asked to make decisions which other family members disapprove of or disagree with – when contentious decisions occur, trustees may find themselves in difficult positions. In situations where trustees do not carry out their duties correctly, financial penalties may be generated  – which can be applied to trustees themselves .

Why choose a professional?

A professional trustee will offer not only a comprehensive understanding of the duties and powers of the position – but also the ability to operate as independent and unbiased third parties when dealing with all other members of the trust arrangement. If a trust encounters difficulties or has to wind up, a professional trustee brings a sense of continuity and reliability, able to reassure and advise beneficiaries and protect their interests as the scheme terminates.

The advantages of professional trustees go further than good financial practice. A well-run and successful trust, benefitting its members and fulfilling the wishes of its settlor inspires confidence in a wider sense: it can significantly promote the image of a company or improve the financial well-being of beneficiaries.


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