A husband and wife had a Trust with a professional independent trustee.  Over many years of dealing with the independent trustee they felt they were making all the decisions themselves and the independent trustee simply signed the documents and sent them a bill for their services. 

When they were undertaking a review of their Trust they asked their legal advisor whether they should keep an independent trustee and what the benefits of this were.

An independent trustee is a trustee who is not a beneficiary of the Trust (that is, someone who doesn’t benefit from the trust fund).  Traditionally they are lawyers or accountants, or companies set up by lawyers and accountants, but equally they can be a family member or any other person not entitled to receive a benefit from the Trust.

There is no requirement under the Trustee Act 1956 (nor will there be a requirement under the Trusts Act 2019 when that comes into force in January 2021) for a Trust to have an independent trustee. 

The benefit of having an independent trustee is that they add an element of transparency to the Trust, so if any third party is looking at the Trust they can see that there is an independent person who is moderating the decisions of the trustees.

This can help to alleviate any claim that a Trust is a sham or set up solely for the benefit of the Trustees personally.

However, provided proper Trust records are kept, annual meetings are held (with minutes recording any decisions), and provided that Trustees are always considering the needs of the beneficiaries and acting within the confines of the law, a Trust can be robust without an independent trustee being involved.

It is important to discuss your particular situation with your legal advisor, to work out whether an independent trustee would be beneficial for you and your Trust.

 

Leading law firms committed to helping clients cost-effectively will have a range of fixed-priced Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.

 

Claire Tyler
Partner
Wellington


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