WillsConsiderations When Appointing Trustees

When drafting a will that includes a trust, one of the most critical decisions a testator must make is the selection of trustees. Trustees are responsible for managing the trust’s assets and ensuring that the terms of the trust are carried out in accordance with the testator’s wishes. Here are some key considerations for testators when choosing trustees for will trusts.

Number of trustees

A trust can be managed by a sole trustee, but it is advisable to appoint more than one trustee for multiple reasons:

• If the trust includes land, more than one trustee would be required for any sale or disposition of the land.
• The trust terms might require more than one trustee for some trustee powers, for example, commonly with a discretionary trust multiple trustees will be required to appoint capital to beneficiaries.
• If the sole trustee dies, this would require their personal representatives to appoint new trustees for the trust.

Personalities

Where multiple people are being appointed, they should consider the personalities of those people and relationships between them. It would be highly inadvisable for example, to appoint children to act together if it is well known that they do not get along, particularly for appointments as trustees for trusts that may last for a long amount of time, such as a discretionary trust. Trustees need to act unanimously, unless the trust deed provides they can act by majority, so if there are conflicts this could lead to the trustees not being able to make decisions. An application to the Court may be required if the trustees cannot agree.

Location

Trustees may need to be physically present to deal with the trust decisions. Appointing trustees who live at the other side of the country, or even abroad, may not be the best decision if there are other options who live more locally.

The residency of the trustees can affect the trust’s tax obligations. If the majority of trustees are non-UK residents and they control the trust’s decisions from outside the UK, the trust could be deemed non-resident, altering its tax liabilities.

Guardians

When appointing trustees for bereaved minors or young person’s trusts, the guardians are likely the best option as they’ll know the children’s specific needs, so they are a potential option to be named as the trustees. If they are sole trustees, however, there could be a risk of potential misuse. To balance this, independent people could be appointed to act alongside them.

Spouse as Trustee

Where a trust is included in favour of the spouse, it is advisable to include other trustees to act jointly with them in order to prevent potential misuse due to the spouse being sole trustee, as well as primary beneficiary. This is particularly applicable when including a trust where powers to advance capital are included, such as a discretionary trust or FLIT.

There is also a potential concern where a spouse is trustee of a trust where they are the life tenant, and they lose capacity. Due to the terms of S36(9) Trustee Act 1925, they could not be removed as a trustee without approval of the Court of Protection. Where a spouse is elderly, it may not be best to appoint them as a trustee.

Complexity

If the estate is complex or a trust is likely to be complex, it should be considered whether the suggested persons would have the required skills to manage the trust. Professionals would normally be advisable for testators with complex affairs.

Protecting a Beneficiary

Where a trust is being included to protect assets for a certain beneficiary, for example due to alcohol, drug or gambling addictions, it would be advisable to not include that beneficiary as a trustee of that trust.

Conclusion

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