The seemingly relentless increase in compliance regulations in the last three years has hit trustees hard.
The Trust Register is now the only way trustees can comply with their obligations to notify HMRC of the existence of a trust. In order to complete the registration it is necessary to provide full details of the settlor, trustees, beneficiaries and assets. Failure to provide complete or accurate details could lead to penalties for trustees.
At one level it is an on-line system which, while often frustrating to complete, serves a clear purpose.
At another level however it introduces real problems for some trusts, which could be troublesome for trustees.
The information to be disclosed on the Trust Register can include details of some beneficiaries who have not yet had any benefit, but who would need to be contacted for personal information such as their National Insurance numbers.
This could open up a can of worms for some trusts, by alerting people who are not likely to be receiving anything for the foreseeable future (if ever), to their being potentially able to benefit from this trust.
For instance, they may be mentioned in a letter of wishes just as an alternative or back-up person, in specific situations, with no intention for the present that they should have anything from the trust at all.
So what can be done? If you’re a trustee, it’s worth taking stock of the trust, its purpose and beneficiaries, to see who is or might be benefiting compared with those named in a will or trust deed, or an accompanying letter of wishes.
In some cases, if there are potentially ‘troublesome’ family members or others who are named and would have to be contacted, it may be sensible to consider the trustees making a formal legal change, either by a trust deed or a revised letter of wishes.
Experienced advice on the legal, tax and practical issues involved is needed if you have any concerns.
Being appointed as a trustee can bring complex but rewarding challenges. Here’s a summary of our top ten trustee tips.
Familiarise yourself with the trust, its beneficiaries and their interests, its assets and its purpose. Know what your powers are, and any wishes expressed separately by the settlor
Keep in contact with your co-trustees and be involved in the decision making
Be mindful of legal duties, particularly the duty to take reasonable care. Seek specialist advice if you need them clarifying
Consider also seeking specialist advice on compliance with administrative aspects such as self assessment returns, IHT reporting, trust accounts and deeds, reliefs and exemptions, investment of assets, and distributions. Don’t be afraid to challenge the professional advice Remember a trustee is personally liable so it is always best to err on the side of caution
Record trustee decisions and resolutions and keep safe all trust documents, letters of wishes and correspondence
Consider disclosure requests. Who is requesting the documents and what is their interest in the trust? Will disclosure prejudice the interests of the other beneficiaries and can sections be redacted? Guard against disclosing minutes of trustee meetings, agendas or correspondence between the trustees
Regularly review the purpose of the trust, its assets, their performance, and the status of the beneficiaries
Communicate with the beneficiaries on a regular basis - this generates an understanding of their circumstances and any major events in their lives. It also helps to allay any suspicions about what the trustees are up to
Being a director of the business and also trustee of shares in the business brings with it potential for conflict. Be familiar with the constitution of the business and the terms of the trust – are there powers which enable the director/trustee to manage the potential conflict?
Be careful not to make a profit. What does the trust say about expenses? Trustees should not place their personal interests in conflict with their trustee duties.
Now is an important time to review your trusts, to ensure they are fully compliant, are being administered correctly, and are meeting the real purpose of the trust and the needs of the right beneficiaries.
Our experts have created a handy guide to help trustees and their advisors, please download it here Top Ten Trustee Tips
Published: 22 March 2018
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