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Administration by prudent trustees.

1. What do we mean by administration of the trust?

My Definition of Trust administration

This simply is the running of your trust in an efficient way, ensuring that management of the assets is taken care of and that all trust decisions and events are recorded. It is done to ensure that the trustees at all times act in the interest of the beneficiaries according to the Deed of Trust, relevant Regulations and Laws.

Changed attitude about administration

In recent times there has been a change in thinking about running Trusts. In earlier times those who set up trusts, the Settlors, would put their Trust documents in a folder and seldom look at it again. From time to time their accountant or lawyer would pass a resolution to show another Forgiveness of Debt and that was the end of it. During the last four years pressure has increased on the trustees to ensure that all trust affairs are properly recorded. This has become necessary because claims against trusts and trustees have succeeded, especially in the field of matrimonial disputes and in some isolated cases where developers and debtors have abused trust funds.  Courts of Law, Government Departments and Creditors now show an increased interest in how trusts have been run. It has meant that trustees have faced liability issues, and in some cases were even held liable for losses if their actions were not up to the required standard. It is now deemed essential that trustees run their trust as a tight ship.

2. What should prudent Trustees do when administering a Trust?

Prior to their Appointment as trustee

  1. Look at Trust Deed;
  2. Detail the Trust assets;
  3. Look at who the Beneficiaries and Guarantors are;
  4. Look at the Memorandum of Wishes and amendments to know what the original Settlor wished to happen;
  5. Read Resolutions, Minute books to see if they are up to date and to compare to the Trust and the Wishes;
  6. Ask about loans and guarantors – business loans/income producing assets/loans and equity/guarantors jointly or not.

What do new Trustees have to do when they are appointed to an existing Trust?

  1. Familiarise yourself with the trust as set out above;
  2. Refer to Memorandum of Wishes and other guiding material to get to know the Settlor’s wishes, and consult if they are still alive.
  3. Satisfy yourself the trust is in order and is being administered properly in accordance with the terms of the trust, and if in doubt get legal advice.

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