Important Considerations When Choosing Trustees for Your Trust

If your Will refers to a Trust, one of the most important decisions is the selection of trustees. These individuals are responsible for managing the trust’s assets. They ensure that the terms of the trust are carried out according to the wishes of the Will maker.

Key Considerations When Appointing Trustees

How Many Trustees?

A trust can be managed by a sole trustee, but it is often better to appoint more than one. Here are some reasons to consider:

• If the trust includes land, more than one trustee is needed for any sale or disposition of that land.

• Many trust terms require multiple trustees for certain powers. For example, with a discretionary trust, several trustees are necessary to appoint capital to beneficiaries.

• If the sole trustee passes away, their personal representatives will need to appoint new trustees, complicating the process.

  
  

Will They All Agree?

When appointing multiple trustees, think about their personalities and relationships. It can be problematic to appoint siblings who do not get along. For long-term trusts, like discretionary trusts, unanimous decisions are often required. If they can't agree, the trust may face delays, and an application to the court may be necessary.

Are They Local?

Trustees often need to be physically present to make decisions about the trust. Appointing trustees who live far away or abroad might not be the smartest choice. Local trustees can streamline decision-making and help avoid logistical issues.

Additionally, the residency of trustees can impact tax obligations, especially if non-UK residents control the trust's decisions from outside the UK.

Are They Also Guardians?

In cases involving bereaved minors or young persons' trusts, considering guardians as trustees can be wise. They typically know the children's specific needs. However, appointing a sole guardian as a trustee poses a risk of misuse. To mitigate this, consider choosing independent individuals to serve alongside them.

Should a Spouse Act as Trustee?

If the trust benefits a spouse, consider appointing other trustees to act jointly. This prevents the spouse from becoming a sole decision-maker and helps protect against potential misuse. This is especially crucial in discretionary trusts containing powers to advance capital.

Also, if the spouse is the life tenant but loses capacity, S36(9) of the Trustee Act 1925 complicates their removal as a trustee. If the spouse is elderly, think twice before appointing them as a trustee.

Is the Estate Complex?

For complex estates or trusts, evaluate whether the suggested trustees possess the necessary skills. In cases involving complicated affairs, it is usually advisable to seek professional help.

Is the Beneficiary Vulnerable?

If a trust is set up to protect assets for a vulnerable beneficiary—such as someone with addiction issues—do not include them as a trustee. This helps prevent potential conflicts and mismanagement.

The Importance of Choosing the Right Trustees

Trustee selection holds significant weight in the overall functioning of a trust. The right trustees can ensure that the trust is managed effectively and according to the testator's wishes.

By carefully evaluating each potential trustee against the key considerations outlined above, you can make informed decisions. Don't rush this process; it's crucial for the long-term health of the trust.

Communicate Clearly and Regularly

Communication is key for effective trustee management. Establish regular meetings and updates between trustees and beneficiaries. This fosters transparency and keeps everyone informed.

Be Prepared for Changes

Life is unpredictable. Trustees can change due to unexpected circumstances, such as illness or relocation. Have a plan in place for replacing trustees if necessary. This ensures the trust continues to function smoothly.

Review the Trust Periodically

Regular reviews of the trust and the appointed trustees are essential. Life events and legislation can impact the effectiveness of the trustees. Keep all parties informed about their roles and responsibilities.

In Summary…

Selecting trustees is crucial when drafting a will that includes a trust. The right choice can greatly affect how the trust is administered and ensure the testator's wishes are fulfilled.

By thoughtfully considering these factors, testators can appoint trustees who are well-prepared to manage the trust responsibly. This not only safeguards the interests of all parties involved but also promotes the trust's success.

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