Can A Trustee Be A Beneficiary Of A Trust?

A Trust is an arrangement where an individual (known as the settlor) transfers assets such as property, money and financial investments for the benefit of other individuals (known as the beneficiaries).

The settlor will state in writing the way they wish the trust to operate.

Trusts can be used to protect the financial interests of loved ones in numerous ways, including:

• Reducing inheritance tax liabilities
• Setting up a fund for a child with physical or mental disabilities
• Sheltering family assets from care home fees

What Is A Trustee?

A Trustee is appointed by the settlor to manage the assets on behalf of the beneficiaries of a trust. In the UK they have a legal responsibility to do what is best for the beneficiaries within the terms laid down by the settlor.

What Powers Does A Trustee Have In A Will?

The powers of a Trustee can vary according to the terms of the trust as written in the Will.

In some cases, the settlor may set out detailed instructions on issues such as payments to the beneficiaries.

In the case of one of the most common forms of trust, however, such decisions are left to the trustee – these arrangements are known as discretionary trusts.

Can A Trustee Also Be A Beneficiary?

Under UK law, a Trustee can also be a beneficiary.

This could happen, for example, where the settlor establishes a trust for the benefit of their grown-up children and feels one of them has the skills and experience to manage it.

In such circumstances, their choice of trustee could also be influenced by a desire to keep the running of the trust within the family.

While some may feel it problematic for one person to be both Trustee and beneficiary, the potential for a conflict of interest may be reduced if the settlor has set out in detail how the trust is to be administered.

Can A Trustee Be A Beneficiary Of A Discretionary Trust?

As with other forms of Trust, a Trustee can be a beneficiary of a discretionary trust.

Due to the wide-ranging powers that such a Trustee can exercise, however, there may be an increased potential for a conflict of interest.

This is because the Trustee has a legal duty to act in the best interests of all beneficiaries and not just themselves.

Should others believe the Trust is being managed in the trustee’s own financial interests this could lead to a family dispute and even a legal challenge to have the Trustee removed from their position.

How Can The Risk Of Conflict Of Interest Be Reduced?

Putting safeguards in place

The settlor could take pre-emptive steps to avoid problems occurring by implementing measures to reduce the potential for conflict of interest when setting up the Trust.

A solicitor will be able to advise on this option.

Effective communication

The likelihood of tensions arising may be reduced if the Trustee provides regular updates on the reasoning behind their actions and maintains comprehensive records of the Trust’s operations.

For major decisions, they may elect to seek independent professional advice and make that guidance available to their fellow beneficiaries.

Having more than one trustee

The potential for conflict of interest could be reduced by appointing one or more additional Trustees who are not beneficiaries. Such individuals could be viewed as impartial and able to offer objective views.

Expert Advice On Writing Your Will From Wilson Browne Solicitors.

Trusts are a complex area of law and it’s highly recommended that you obtain expert legal advice if you’re planning to set one up.

Wilson Browne Solicitors has a wealth of knowledge in this area and a successful track record of creating trusts that are tailored to the needs of you and your loved ones.

We will be delighted to discuss acting as a Trustee in order to ensure the smooth running of your trust and can also offer specialist guidance and support on the administration and termination of trusts based on our considerable experience.

Our dedicated team of Trust solicitors work at all times with the highest levels of confidentiality, integrity and professionalism.

The first chat is free, and we will always be transparent about future costs.

With branches in Corby, Higham Ferrers and Rushen, Kettering, Leicester, Northampton and Wellingborough we can offer you a friendly face-to-face meeting at a convenient location.

Please get in touch on 0800 088 6004 or by completing our online contact form.