Who should you appoint as a Trustee ?

If you establish a trust during your lifetime it’s important to remember that you are transferring legal ownership of assets - whether cash, policies or other assets -to the trustees. The trustees then hold the trust assets in accordance with the trust provisions for the benefit of the beneficiaries. In other words ownership passes from the person establishing the trust to the trustees.

Trustees should be aged 18 or over and be of sound mind i.e. have mental capacity. This may seem like an obvious point however while a person appointed as trustee may have mental capacity at the date the trust is established, if they are in their seventies or eighties, there is a real chance that they may subsequently lose that capacity as age catches up with them.

If a trustee is no longer mentally competent to act, the remaining trustees are prevented from acting unless and until a replacement can be appointed. Where a trustee has appointed an attorney under an Enduring Power of Attorney or Lasting power of Attorney this will not help because a trustee cannot delegate their duties as trustee except in very limited circumstances.

The trustees should be trustworthy and familiar with the beneficiaries’ financial situation and other circumstances. This will help them when they are exercising their powers. For example, trustees of a flexible trust usually have a duty to consider which of those beneficiaries should benefit, by how much and when. The trustees need to give consideration to all of those beneficiaries even though they might not appoint assets to all of them.

Beneficiaries can be trustees as well as beneficiaries, as long as they can be trusted to comply with their duty to act impartially as between the beneficiaries.

Trustees also need to get on with each other, as they must act unanimously when carrying out their duties or exercising their powers

If there are frictions within a family or between the beneficiaries, then you may want to consider appointing a professional trustee, such as an accountant or solicitor, preferably one who specialises in trusts and estates e.g. a Trust and Estate Practitioner (TEP). Should you decide to go down this route, the professional trustee will charge for their services.