Definition
A trustee is a person or organisation you appoint to manage money or assets held in trust, with legal responsibility to use them solely for your beneficiaries' benefit.
This role is essential for inheritance to children under 18, vulnerable beneficiaries needing protection, or balancing complex family interests like protecting children from a previous relationship while providing for a current spouse.
What Does Trustee Mean?
Under the Trustee Act 2000, trustees hold legal title to trust property and must manage it exclusively in beneficiaries' best interests. This creates a fiduciary relationship—a legal obligation requiring trustees to put beneficiaries first, act with loyalty, and avoid conflicts of interest. Trustees are commonly appointed for children under 18, vulnerable adults, or complex family situations like second marriages.
While executors and trustees are often the same people, they serve distinct roles. Executors handle initial estate administration—paying debts, distributing gifts, obtaining probate—typically completing within 9-18 months. Trustees manage ongoing trusts, a role lasting years or decades. The same person can serve both roles, but the responsibilities differ legally.
Section 1 of the Trustee Act 2000 requires trustees to "exercise such care and skill as is reasonable in the circumstances." They must invest prudently, keep accounts, file tax returns, and balance beneficiaries' interests. If Sarah leaves £150,000 to her daughter Emma (age 10) with instructions to release £25,000 at 21 and the remainder at 25, trustees must invest conservatively, potentially support Emma's education, and ensure proper distributions. This requires record-keeping, tax compliance, and investment decisions over 15 years.
Lay trustees (family or friends) typically serve without payment unless authorised in your will. Professional trustees charge 0.5-2% of trust value annually—£1,000-£4,000 for a £200,000 trust. Many appoint both a family member and professional, balancing personal knowledge with expertise. Most trusts must register with HMRC's Trust Registration Service within 90 days of creation.
Trustees are personally liable for breaches—poor investments without advice or misusing funds means repaying losses personally. Choose competent, trustworthy individuals over 18 who aren't disqualified (like undischarged bankrupts). Appointing 2-4 trustees ensures continuity and oversight.
Common Questions
"Do I need to appoint trustees in my will if I have children under 18?"
Yes. Trustees manage inheritance for children under 18 (or older if you specify). They safeguard money, make investment decisions, and release funds for education or needs. Without appointed trustees, courts may appoint someone, delaying access and potentially not reflecting your wishes.
"Can the same person be both an executor and a trustee in my will?"
Yes, this is common. Executors handle initial estate administration; trustees manage ongoing trusts. Executor duties typically end within 1-2 years; trustee responsibilities can continue for decades.
"Do trustees get paid for their work, and are they personally liable if something goes wrong?"
Lay trustees typically serve without payment unless authorised. Professional trustees charge 0.5-2% of trust value annually. Trustees are personally liable for breaches—making poor investments without advice can mean repaying losses from their own money.
Common Misconceptions
Myth: Trustees can do whatever they think is best with the trust money.
Reality: Trustees must follow specific terms in your will and act within those parameters. They have a fiduciary duty to act solely in beneficiaries' interests and comply with the Trustee Act 2000. They cannot make unauthorised profits, must avoid conflicts, and face personal liability for breaches.
Myth: Being a trustee is just a formality—there's not much actual work involved.
Reality: Trusteeship is a significant, long-term responsibility lasting years or decades. Trustees keep accounts, file tax returns, make investment decisions, balance beneficiaries' interests, and stay current on trust law. For a £200,000 trust, expect 20-40 hours yearly on administration and compliance—more if disputes arise.
Related Terms
Understanding trustee connects to these related concepts:
- Trust: Trustees manage trusts—the legal structures that hold assets for beneficiaries' benefit.
- Settlor: The person who creates the trust and appoints the trustees to follow their instructions.
- Beneficiary: Trustees owe fiduciary duties to beneficiaries, managing trust assets for their benefit.
- Executor: Executors handle initial estate administration; trustees manage ongoing trusts—often the same people wearing different hats.
- Guardian: Guardians raise children; trustees manage children's money—both appointments are essential for parents with young children.
Related Articles
- [Estate Planning Fundamentals]: Learn how trustee appointments fit into your overall estate plan.
- [Protecting Children's Inheritance]: Essential for parents appointing trustees for minor children.
- [Blended Family Estate Planning]: Protect children's inheritance while providing for a current spouse.
- [Trustee Duties and Responsibilities]: Comprehensive guide for anyone appointed as a trustee.
Need Help with Your Will?
Choosing the right trustees is one of the most important decisions in estate planning. Whether you're protecting children's inheritance or managing complex family situations, you need trustees you can trust.
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Legal Disclaimer: This glossary entry provides general information about UK legal terminology and does not constitute legal advice. For advice specific to your situation, consult a qualified solicitor.