Whether you’re thinking of becoming a trustee for your own family trust or someone else’s, it’s important to know your obligations under the current law before accepting the role.
8 things to know before becoming a trustee
- It’s a legal responsibility with a lot of work involved (most often voluntary) and you could end up being liable for losses made by the trust if you don’t do the job properly.
- You’re in it for the long haul – some trusts have a set end-point, ie: when a child turns 18, but others can go on for over a century.
- You must know and understand the trust deed, all associated documentation and the trust’s property, assets and liabilities.
- You’ve got to stay impartial when managing or distributing trust property to beneficiaries – no favourites!
- You have to ensure all relevant documentation with regard to the trust’s assets are signed by all trustees, not just the ‘Mum and Dad’ of the trust (check the trust deed, though, in case it says otherwise).
- When making trust decisions, you have to agree with the other trustees (unless the trust deed says otherwise). So you need to be sure that you can work well with the other trustees before taking on the job.
- You must actively participate and make all the decisions – no delegating or relying on others to do your job.
- Paperwork will be your friend – keeping accurate accounts and recording all trustee decisions as requested by beneficiaries will keep you out of deep water.