What Is a Will Trustee?
When writing a will, creating a trust is a great way to ensure your dependents are cared for long after your death. Trusts and the role of trustees can be a little confusing, however, as there are many different types of trusts to suit different requirements. In this short guide, the experts at Percy Hughes & Roberts Solicitors explain the role of will trustees, the duties associated with the role, how you should choose a suitable trustee, and the restrictions that typically apply.
This can be a complicated area of law and, considering it involves looking after your loved ones after you have passed away, it is imperative you understand how a trust works and the role of a trustee before choosing this route.
Below, we explain the duties of a trustee and the purposes of a trust, and answer some of the most common questions in relation to this area of law. We also detail why professional advice is necessary when establishing a trust, and how the experts at Percy Hughes & Roberts can help you to create a legally valid trust that meets your needs.
If you have any questions we have not answered, our expert wills, trusts and probate solicitors are happy to speak to you regarding your query and provide the legal services you need. You can contact us by completing the enquiry form below or by calling 0151 666 9090.
What does a trustee do?
A trustee is an individual who takes responsibility for managing money or assets that have been set aside in a trust. In the case of a will trust, these assets are managed on behalf of those who are due to inherit them - these people are known as beneficiaries.
If you put assets into a trust in your will, the trustees appointed will be responsible for managing and distributing these assets. They must always use the money in the trust in a manner that is in the beneficiary’s best interests, or according to any rules you specify in your will.
For example, if the trust agreement states that the money is to pay for your child’s university fees, the trustee cannot use the money for anything else other than that. Another example might be to use the trust to pay for an elderly relative’s care fees.
If the trust is a “Discretionary Trust”, the trustees will have more freedom to decide when and how to distribute the money and assets in the trust. However, any decision should still be in the best interests of the beneficiary, and the trustees can only distribute assets to beneficiaries named in your will - they cannot choose other beneficiaries themselves.
What is the purpose of a trust?
There are many reasons someone may set up a trust when writing their will. The three main individuals involved in most trusts are:
- The settlor – the person who puts the assets or money into the trust.
- The beneficiary – the person who benefits from the trust.
- The trustee – the person who manages the trust.
The settlor appoints trustees when writing their will - it is possible to choose a single person to act as a sole trustee, but it is recommended to choose at least two trustees. There may also be more than one settlor, beneficiary or both involved in one trust.
Some of the most common reasons for setting up a trust include:
- The beneficiary is too young to manage their own affairs, and the trust must manage their assets until they turn 18.
- The beneficiary is an elderly person who needs to pay for long-term care.
- The beneficiary lacks the mental capacity to manage their own funds.
When creating a trust, it is vitally important you consider who to appoint to take care of your estate after your death. As well as appointing one or more executors to take responsibility for general estate administration, you must also appoint trustees to play a specific role in the ongoing management of your trust.
Trustees have a legal responsibility to act fairly and in the best interest of beneficiaries. The role of a trustee may last for many years, so it is vital to choose people you can rely on, who understand the commitment they are making and are familiar with your wishes for the management of the trust.
What does being a trustee involve?
As a trustee, you have a ‘fiduciary duty’ to make decisions with the trust's beneficiaries in mind and to act in accordance with the settlor's final wishes.
The primary role, in this case, involves managing the money and assets left in the trust, and deciding when and how these assets or any income they generate will be allocated to the beneficiaries. Many people leave specific instructions in the trust agreement to offer guidance on what the money should be spent on and when the inheritance should be given, but it may be left completely to trustees to decide.
Unless the trust specifically states that this is acceptable, the trustee should not benefit financially from any of the decisions they make in relation to the trust.
In addition to this, trustees are often required to pay tax on behalf of the trust, including Inheritance Tax, Income Tax, and Capital Gains Tax, where applicable.
Can a trustee in a will be a beneficiary?
If they are named in the trust agreement, a trustee can also be a beneficiary of the trust they manage. In such cases, it is best to ensure that at least one trustee is a non-beneficiary - this means that at least one person involved in the trust does not have a financial interest in it. This is particularly important for discretionary trusts, as it can help to avoid conflicts of interest.
Generally speaking, it is sensible to appoint more than one trustee, regardless of the scenario, to ensure that disputes do not arise. You can appoint a professional trustee for this purpose; because they will be paid, they can fulfil their role without any expectation of benefiting from the trust.
What happens if a trustee of a will dies?
If a trustee dies while there are still assets remaining in the trust, the outcome will depend on whether there are other trustees to continue looking after the trust. If there is more than one trustee appointed, the surviving Trustees can appoint a replacement or simply continue in the role themselves.
If there is only one trustee appointed and they pass away, the executor(s) or administrator(s) is able to appoint a new trustee on behalf of the deceased.
How can Percy Hughes & Roberts help?
At Percy Hughes & Roberts Solicitors, we have a team of dedicated wills and probate solicitors who are ready to help you resolve your query and provide the legal services you need. We have delivered our services in the Wirral, Merseyside and the wider North West area for over 100 years and been recognised by Lexcel for delivering excellent service to all our clients.
We understand that estate planning can be a complicated area of the law, but it is vital that you plan ahead to minimise your tax liability and ensure that your loved ones enjoy the full benefit of your estate. Creating a trust is a fantastic way to ensure your wishes are carried out in the best manner possible for your beneficiaries. It makes sure your loved one’s best interests are always in mind when managing money or assets long after you have passed away.