Traditionally, trustees used to regard their responsibilities as being almost exclusively the safeguarding of the assets of the trust. The Trustee Act 2000 raised the bar somewhat and it is clear that many trustees are unaware of their new responsibilities. Operating as a trustee in ignorance of one’s obligations is a risky strategy, particularly in the present economic environment.
Under the Act, trustees have the specific responsibility to assess the suitability of trust investments and to keep these under review. In this task, they should consider investment spread and risk in the same way that other investors would do. Secondly, trustees are required to obtain proper advice when this is necessary or appropriate.
The point at which the balance between making investment returns and managing the investment risk is struck will depend on the trust deed and on the needs of the beneficiaries.
A trustee should therefore make sure he or she is familiar with the trust deed and their role and should take advice as required on the management of any assets owned by the trust. Where the trust has the ability to invest in a range of assets and it is feasible to do so, the investment portfolio should be kept under review. In some cases, the trust assets are effectively fixed, for example, the trust may own a house or shares in a family company for which there is no ready market. However, even in such cases, if trustees become aware of interest in the trust assets by a potential purchaser, they should take steps to follow up such interest unless the trust deed forbids the sale of the assets.