TRUST ADMINISTRATION

A trust is an obligation owed by the trustee to the beneficiaries. It is a means of separating legal and beneficial ownership of any assets settled into the trust. The trustee holds legal title of the assets and manages them in the best interest of the beneficiaries.

HOW TRUSTS WORK

From a legal perspective assets can be regarded as having two elements of ownership. These are legal ownership and beneficial ownership. A Trust is a structure where the legal ownership of assets is transferred to the Trustees whilst the beneficial ownership remains with the Beneficiaries.

The Trustee (Rock Trustees) is recognised as the legal owner of the property (the Trust Fund) and is responsible for the burdens of ownership such as the maintenance, preservation and enhancement of the assets.

The Beneficiaries are the beneficial owners of the assets and they are the persons who enjoy the benefits of the trust fund. Trustees are legally bound to obey the terms of the Trust Deed. Statutory regulations set out laws that the

Trustees must comply with in the administration of the Trust assets. These laws protect the interests of the Beneficiaries and the Trustees will be liable where there is a breach of reguations.

FIDUCIARY DUTIES OF TRUSTEES

The Trustees have a fiduciary duty to the Beneficiaries of the Trust. If the Trustee’s breach their fiduciary duty, they will be liable for breach of trust. The fiduciary duty includes the following:

Acting in the best interests of Beneficiaries – the Trustees must always act in the best interests of the Beneficiaries of the Trust. This is their primary fiduciary duty.

Act Prudently – the Trustees must act prudently in their management of the Trust assets. If they do not exercise proper due care and the Trust fund suffers loss, the Trustees will be liable for breach of trust. The courts expect Professional Trustees to exercise high standards of care and skill and failure in this obligation will constitute a breach of trust for which the Trustees will be liable to compensate the Beneficiaries, if a loss results.

Accountability of Trustees:

Trustees may not derive any direct or indirect advantage from a Trust, unless expressly permitted by the Trust Deed. Professional Trustee fees must be authorised by the Trust Deed. The basis for charging fees must be completely transparent and agreed with the Settlor.

WHAT CAN BE HELD IN A TRUST

  • Private Company Shares
  • Private and commercial real estate
  • Stocks and Shares
  • Insurance and Assurance Policies
  • Works of Art