Trustees need to consider carefully and be aware of the implications of the Trusts Act 2019.
The Trusts Act 2019 comes into force 30 January 2021.
The key sections to consider are the Trustee Duties in Part 3 of the Act as set out below.
21. Guiding principle in performing duties:
In performing the mandatory duties set out in sections 23 to 27 and (except to the extent modified or excluded by the terms of the trust) the default duties set out in sections 29 to 38, a trustee must have regard to the context and objectives of the trust.
22. Mandatory duties:
The duties set out in sections 23 to 27 are mandatory duties that—
23. Duty to know terms of trust:
A trustee must know the terms of the trust.
24. Duty to act in accordance with terms of trust:
A trustee must act in accordance with the terms of the trust.
25. Duty to act honestly and in good faith:
A trustee must act honestly and in good faith.
26. Duty to act for benefit of beneficiaries or to further permitted purpose of trust:
A trustee must hold or deal with trust property and otherwise act—
27. Duty to exercise powers for proper purpose:
A trustee must exercise the trustee’s powers for a proper purpose.
28. Default duties:
The duties set out in sections 29 to 38 are default duties that must be performed by the trustee unless modified or excluded in accordance with section 5(4) and (5).
29. General duty of care:
When administering a trust (other than when exercising a discretion to distribute trust property), a trustee must exercise the care and skill that is reasonable in the circumstances, having regard, in particular,—
30. Duty to invest prudently:
When exercising any power to invest trust property, a trustee must exercise the care and skill that a prudent person of business would exercise in managing the affairs of others, having regard, in particular,—
31. Duty not to exercise power for own benefit:
A trustee must not exercise a power of a trustee directly or indirectly for the trustee’s own benefit.
32. Duty to consider exercise of power:
A trustee must consider actively and regularly whether the trustee should be exercising 1 or more of the trustee’s powers.
33. Duty not to bind or commit trustees to future exercise of discretion:
A trustee must not bind or commit trustees to a future exercise or non-exercise of a discretion.
34. Duty to avoid conflict of interest:
A trustee must avoid a conflict between the interests of the trustee and the interests of the beneficiaries.
35. Duty of impartiality:
36. Duty not to profit:
A trustee must not make a profit from the trusteeship of a trust.
37. Duty to act for no reward:
A trustee must not take any reward for acting as a trustee, but this does not affect the right of a trustee to be reimbursed for the trustee’s legitimate expenses and disbursements in acting as a trustee (see section 81(2)).
38. Duty to act unanimously:
If there is more than 1 trustee, the trustees must act unanimously. This duty is usually amended by the terms of the trust deed of most charitable trusts. It is important for trustees of charitable trusts to check the terms of their trust deed and if there is not a provision in the deed amending this duty the trust deed should be varied to allow for decisions in a charitable trust to be decided by a majority.
The following sections are also relevant for Trustees of Charitable Trusts:
45. Trustee must keep core documents:
Each trustee of a trust must keep, so far as is reasonable, the following documents relating to the trust:
46. Keeping documents where there is more than 1 trustee:
If there is more than 1 trustee of a trust, each trustee must comply with the obligation in section 45 by—
47. Documents must be kept for duration of trusteeship:
A trustee must keep, so far as is reasonable, the documents for the duration of the trustee’s trusteeship.
48. Trustee must pass on documents:
At the time that the trusteeship of a trustee ends, if the trust continues, the trustee must give at least 1 replacement trustee or continuing trustee the documents that the trustee holds at that time.
The following points are also relevant for Trustees of Charitable Trusts:
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