Trust Review Service for Trustees

The Trustee Act 2000 obliges Trustees to ensure Trust assets are invested appropriately, tax efficiently and regularly reviewed. As the Trustee, it is your regulatory responsibility to seek professional advice and create an Investment Policy Statement aligned to the Trust objectives. This is a mandatory requirement, especially if you are appointing an external investment manager. Non-compliance could result in a negligence claim.

Investing Trust Assets

When a Trustee is considering the best way to invest Trusts assets, it is not simply a matter of minimising risk. For instance,
an overweight cash position might be perceived as ‘safe’ from capital loss, however this does not entirely satisfy the Act’s requirements, given spending power will be eroded by inflation over the longer-term. In addition, a stockbroker managed portfolio of 20 to 30 direct UK equities, rebalanced on an annual basis, no longer gives you the diversity nor tax efficiency required under the Act.

The following investments are relevant for Trust investment. As a Trustee you need to be clear why you do (or do not) have exposure to each asset class: UK equities, overseas equities, cash, corporate bonds (investment grade and high yield), property (commercial and residential), and alternatives. Our Trust Review Service involves assessing the objectives of the Trust and creating an Investment Policy Statement considering all of these asset classes.

Trust Review Service

Our Trust Review Service will help enhance your proposition to Trustee clients and ensure compliance with the Act. It includes a systematic review of all Trusts within your practice. It includes:

  • Initial Review - a ‘suitability’ report analysing the Trust assets in relation to the Trustee Act. We also recommend corrective action to address any weakness within the portfolio.
  • Investment Policy Statement - creation of bespoke Investment Policy Statement for the Trust.
  • Annual Review - short-form ‘suitability’ report highlighting any changes in legislation and the investment world, with an update on the progress of the portfolio.
Suitability Report

Each suitability report contains the following information:

  • Overview of the Act and broader considerations
  • Note on current tax legislation for Trusts
  • Trust Investment Policy Statement
  • Suitability of the investments to meet the Trust objectives
  • Suitability of the Trust assets in relation to the current investment climate
  • Diversification strategy
  • Taxation position of current assets
  • Review of performance against benchmark
  • Strategy for formal Trust reviews
  • Summary of current position

For more information about our Trust Review Service or to find out how we can help you to create a clear strategy for dealing with the implications of the Trustee Act, please contact a member of our team.