The overall concept of a Trust is simple. It is an arrangement that allows for a third party (i.e., Trustee), to hold assets on behalf of and for the benefit of another person or persons (a beneficiary or beneficiaries).
A trustee might be appointed by someone to hold property in a family trust (also known as an inter vivos trust) or alternatively may be appointed in a person’s will (testamentary trust) to hold property and undertake duties in relation to it after a person has died.
The Trustee legally owns the property and is responsible for it. This gives them a lot of power but they also have a number of mandatory duties designed to protect the beneficiaries and their interests in the property.
Trustees must know and adhere to the terms of the trust, and its overall purpose (regardless of which type of trust). They must act honestly and in good faith, for the benefit of all beneficiaries. They must invest prudently. Their exercise of duties must be for proper purposes. Trustees must act impartially and not for their own profit or reward. Trustees are required to act unanimously.
If you are a trustee or have an interest in property held in trust, it is important to be aware of the “fiduciary duties” of trustees to act in the trust’s best interests. This means, they need to fulfil their duties in good faith as the trust entrusts the trustee with a certain degree of power. Failure to do so, can lead to the revocation of a Trustee and where a trustee neglects their duties, they may face personal liabilities.
For expert independent legal advice talk to your straight talking legal team at Arnet Law