Trustees: The importance of keeping up with your Trust management obligations despite the COVID-19 lockdown

The Government’s alert level four response to the COVID-19 pandemic has changed a lot about daily life in a very short space of time.  People are balancing work and family commitments while confined to their homes. 

In these unprecedented circumstances, it is important for trustees of trusts to keep up with their usual obligations to ensure that proper trust management does not become overlooked.

Trustees who let their trust management obligations slip could find themselves personally liable to the beneficiaries, or to third parties, such as the bank, for breaching their trustee duties.

Trustee duties

As part of their responsibility for the management of a trust, trustees owe a number of broad duties to the beneficiaries.  These generally include being responsible for efficiently managing the trust, keeping proper accounts, investing prudently, and acting for the benefit of the beneficiaries. 

Trustees can be personally liable to the beneficiaries for failing to adhere to the terms of the trust, and can even be liable to a third party (for example the bank or someone they have entered into a contract with on behalf of the trust) if the trust is not properly managed. 

This can have very serious consequences and can result in the trustees having to use their own assets to meet those liabilities.

Making use of technology

Trustees must ensure that despite the changes and restrictions imposed by the current pandemic, they keep up with their trust management responsibilities. 

In order to properly administer a trust, trustees need to hold regular meetings, even if there has been little or no activity in the trust, and keep proper written records of all the trust’s activity. 

The level four lockdown has shown that there are some great phone and video calling options available for people to keep in touch, and these can be used by trustees to hold their regular trust meetings.  Minutes and records can be sent around the trustees by email. 

Many documents can be printed, signed, and emailed in multiple copies, and some documents can even be signed electronically.  Trustees should always make sure that they know the signing requirements for particular documents, as some documents will not be considered valid if only signed electronically. 

Trustees will not be excused from their responsibilities simply because of the pandemic.  If beneficiaries or a third party have concerns about the way a trust has been managed, the Court will look at the trustees’ failure to adequately manage the trust as seriously as at any other time (unless there are extenuating circumstances). 

Trustees must be able to show that they used their best endeavours to keep on top of managing the Trust despite the pandemic.

Time for a Trust review

Now is a good time for trustees to talk with their legal advisors regarding assistance with managing their Trust, to ensure that the Trust is still fit for purpose and to make any necessary modifications. 

New trust legislation is coming into force on 30 January 2021 that will make a number of significant changes to the way Trusts work, so it is also timely for Trustees to take legal advice to get on top of the changes now.  You can find out more about the new Trust law, and upcoming changes, in our article here.