If you've been appointed as a Trustee, you're bound to have questions about your responsibilities. Our trusts solicitors explain the details.
1. Do I have to accept the appointment?
No. Nobody can be compelled to accept the office of trustee.
2. Can I change my mind?
Yes, you can resign at any time. In the case of a continuing trust you may be required to help find a replacement trustee.
3. Does acting as trustee impact my tax position personally?
No. Acting as a trustee should have no impact on your personal tax position.
4. Do trustees get paid for their work?
Generally speaking the answer is no. Professional trustees are entitled to be paid for their work, either through the trust instrument or under general law but lay trustees are not.
5. Can trustees claim expenses?
Yes, trustees are entitled to reclaim expenses properly incurred in the course of their duties from the trust fund.
6. As a trustee would I be personally liable if anything went wrong?
There is a possibility that you could be personally liable for a "breach of trust". In most cases a trustee has a right to be indemnified out of the trust property, either under the trust deed or under general law (assuming the trust fund is sufficient to meet those liabilities).
There are many measures that you can take to protect yourself from liabilities, such as seeking professional advice where applicable and ensuring reasonable steps are taken to protect trust assets.
The most important thing to remember is to act fairly and impartially when considering the interests of all of the potential beneficiaries, although this may not be easy at times. Your connection to the settlor, the beneficiaries and the personal knowledge you have will aid you in doing this. It is undoubtedly a reason the settlor considered you for the role.
7. As trustee would I be liable for "breaches of trust" by fellow trustees?
Trustees are personally liable for their own breaches of trust, but not for those of co-trustees. However, breaches of trust may be passive or active and so trustees are liable if they fail to prevent other trustees from committing breaches of trust.
There are some defences of breach of trust. The court may wholly or partly excuse trustees for breach if they acted honestly and reasonably, and ought fairly to be excused.
8. As trustee would I be liable for the losses of the trust?
Most trust deeds contain a provision stating that the trustees will not be liable for loss suffered by the trust fund, unless it is caused by their own fraud or negligence.