Managing a trust

• administer the trust in accordance with the trust deed;
• comply with all relevant trust law;
• have regular meetings to discuss the trust, reflect on any changes and make decisions;
• manage the trust assets (this may include cash, investments or properties);
• arrange for distributions to the beneficiaries from the trust fund;
• keep detailed records such as annual accounts to retain an accurate picture of the trust’s assets and liabilities; and
• deal with trust’s tax affairs.

Menzies assist many trustees meet their obligations in respect of their accounting and taxation requirements.  We can keep detailed records, prepare annual accounts and manage all the taxation requirements.  This can involve registering the trust with HMRC, preparing and filing annual tax returns and any inheritance tax returns, advising on tax payments and issuing distribution statements to beneficiaries.  We can also provide regular updates to any changes to UK trust tax legislation and consider how these changes impact the trust.

It is usual for professional trustees to charge a fee for trust management, and these tend to start at around 1-2% of the trust’s assets.  They may be other fees depending on the nature of investments.  For example, investment portfolios will also charge a fee for managing trust investments based on a % of the assets.

Over time, the beneficiaries will get older, their lifestyles may change and they may even emigrate overseas.  Trustees need to manage the trust to ensure they can meet the ever changing needs of the beneficiaries.  In some situations, the purposes of the original trust may be no longer relevant, and in situations like this, trustees should consider winding up the trust.

It is also possible that trustees may not be properly managing a trust.  They may not be keeping regular records, they may not be aware of the tax obligations of the trust, they may not be considering all the beneficiaries’ needs and they may be incurring excessive fees for running the trust.  These issues do occur.  Trustees may wish to retire voluntarily but sometimes it may be necessary to remove them. In these cases, it is essential that any procedures in the trust deed for replacing trustees are followed properly.  In situations where this has occurred, Menzies can help the new trustees get to grips with the historic accounting position of the trust and get up to date with the trust’s taxation obligations, by making suitable disclosures to HMRC.