Trustee Record Keeping – what’s required
23 July 2020
The best way for trustees to demonstrate their duties have been fulfilled is through proper, accurate and timely record keeping, says Gerry Brown, chartered accountant and tax and trust specialist for QB Partners.
What is the basic duty of a trustee? Reduced to a single phrase it is to look after assets for beneficiaries.
How do trustees demonstrate that duty has been fulfilled? By keeping records of what they have done.
Beyond that basic duty to the beneficiaries, trustees have statutory duties. The two most frequently encountered are the duty to self-assess for tax purposes, and the duty to register with the Trustee Registration Service (a consequence of the EU Fifth Anti-Money Laundering Directive).
Trustees therefore need to keep records. But what records? It should go without saying that each and every trustee should have a certified copy of the trust deed and copies of any letters of wishes.
All trustees should keep a record of the following:
The following records should be held in relation to the ‘parties’ to a trust:
Beneficiaries can be identified by ‘classes’, rather than being individually named but in reality the trustees should know the identity of the settlor’s intended beneficiaries. A letter of wishes will reveal their identities.
These are the basic records which should be held for every trust.
When the trustees then invest the trust fund and generate income, gains or capital growth the following information and data sources should be recorded primarily to assist with self-assessment but also to report investment performance to beneficiaries:
At a more complex level if assets are sold or purchased during the year, a record must be kept of:
If the trust holds investment property they will need:
If the trustees have received additional assets (from the settlor or others) they will need to know:
It is of course essential that decisions made by the trustees are recorded including:
These seem at first glance to be onerous requirements but if implemented timeously, they will save stress and time (and reduce professional fees) during the ‘life’ of the trust.
Finally all trustees should agree on the identity of the ‘lead’ trustee (often the first named trustee) who normally is responsible for completion of self-assessment returns and liaising with professional advisers.
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