Please enable JavaScript.
Coggle requires JavaScript to display documents.
Different types of trustees and their overall responsibilities (Unit…
Different types of trustees and their overall responsibilities
Discretionary trusts
Usually given wide powers to distribute the income or capital of the trust as they see fit or to accumulate income
May exercise their powers at their absolute discretion, to decide who will benefit, when they will benefit and in what proportions if at all
Beneficiaries do not have an automatic right to benefit from the trust fund
Trustee only needs to consider whether they should benefit
Fixed interest trusts
Required to pay or apply the fixed interest element of the trust as specified in the trust deed
Must manage the trust fund in a manner that does not unduly affect the interest of either the income or capital beneficiaries
For example it would be unfair to tie up the capital of a fixed interest trust in a non income earning asset as this would seriously affect the income due to the life tenant
Bare trustees
Has no discretionary powers and must simply hold the property and deal with it or transfer it when instructed
Trustee is effectively a mere nominee and does not owe a duty to enhance the trust fund or otherwise deal with it except as instructed by the owner
Managing trustees
Defined by the Charities Act 2011 as the group of people who actually have the general control and management of the administration of a charity
Charities usually have a board of trustees, directors or management committee who take key strategic decisions about the activities of their organisation and ensure that the charity is well run
Trustees of offshore pension funds
An arrangement under which an organisation such as a large multinational corporation makes financial provisions for its past, present and future employees as well as its senior executives
Pension funds act as vehicles for payment of pension monies they may also be used to pay general benefits to employees and executives
An occupational pension fund will usually be structured as a discretionary trust. The employer company will be the settlor and the company's current, previous and future employees will be the discretionary beneficiaries, often known as members of the scheme
There will be a trust deed which sets out the terms and conditions under which the pension contributions and/or benefits are to be held
The terms of the trust deed are often referred to as rules. There will of course be a trustee who will be given certain powers which will not be dissimilar to those given to trustees of private trusts
Unit trusts
The trustee will be responsible for overseeing the management of the unit trust and safe keeping of the assets of the trust
A professional trustee is required in order to ensure that the terms of the trust deed are followed and this is undertaken by the manager who may also be the promoter but will be responsible for the day to day administration of the fund and will report to the trustee
The trustee will be required to take control of the assets as legal owner and usually arrange to appoint a manager for day to day management of the fund
It is normal practice for the trustee to also appoint a custodian to hold the underlying investments in the fund
The trustee will also be responsible for checking the price and method of pricing of the fund and will oversee the distributions from the fund which are made to the investors
Trustee will be responsible for the register of unit holders of the fund although this responsibility would usually be delegated to the custodian or registrar
With a unit trust, the trustee would need to work with number of other professionals including
A manager to administer the fund in accordance with the terms and conditions of the trust deed as well as in accordance with the local regulations which may apply to the unit trust. The requirement that the manager be a local company enables the authorities in the offshore jurisdictions
An accountant to prepare financial statements and fulfil other accounting requirements as appropriate
An auditor to confirm the accuracy of the financial information produced
Registrars to record all investor details and the units that have been sold
A custodian who will be responsible for the physical safe keeping of the share certificates which have been issued in respect of the underlying investments. In some cases the custodian may also be the registered owner of the investments and hold them on behalf of the trustee
Personal representatives as trustees
A personal representative is usually named in the will of the deceased or appointed by the court to administer the estate of the deceased and the following principles have been established
During the administration, the entire ownership of the assets of the deceased's estate becomes that of the personal representative
Until the estate was administered, the widow (heirs) of the deceased has no interest, equitable or otherwise in any particular asset of the estate
The widow (heirs) have the right to ensure that the estate was correctly administered by the personal representative
The beneficiaries of a discretionary trust are entitled as a collective group to the full equitable entitlement of the trust assets. This is so even though such beneficiaries are individuals and may not be able to distinguish and identify the actual and precise share of the trust assets to which they may be entitled
The personal representatives are entitled to the whole of the estate both legal and equitable whilst the estate is being administered but should be careful not to mix funds belonging to the separate and identifiable beneficiaries