Trust Investing
August 12th, 2010Since the introduction of The trustee Act 2000, trustees now have specific responsibilities relating to the services and administration of trust funds. The duty of care applies to lay and professional trustees. However higher standards are expected from professional trustees.
A legal duty of care applies to the trustee investment funds that are contained within the trust. For new or existing trusts, the trustees must take into account the trusts aims and the suitability of the investment funds to be held.
Trustees have an obligation to protect the asset value of the trust fund, whilst providing income for the beneficiaries. It is fundamental for trustees to think about the suitableness of the investments in the trust, funding, the type of trust arrangement and the requirements of the beneficiaries.
A diversified portfolio of assets should be used to meet the trusts specific targets.
This approach can help to limit the risks within the trust investment by placing across different asset categories. It is critical to take into account risk any particular requirements of the trustees. This could also include vesting in an ethical or sociably responsible way.
Trustees have an administrative duty to survey the assets held within the trust on a regular basis. This can be a prolonged and lengthy process, especially if the trust administrators are not experienced investors.
Trusts and Financial Advice
It is fundamental to seek independent and unprejudiced advice on the assets held inside any form of trust arrangement. We continually advise new and existing trustees on acceptable asset allocation investment strategies.
Trustees often engage the investor functions of a bank or stockbroker. Occasionally the service is not unique to the demands of the individual trust. A one size fits all approach may not take into account the specific needs of the trust. For example, the demands of a large educational trust could be totally different to a small family trust.
The costs to administer the investments are an important element. The admin fees charged by stockbrokers and banks for trust investment funds management can be expensive. This will have an effect on the investment returns the trust can achieve.
Our investment funds procedure takes into account the costs, as this is a recognized factor when we advocate special investments.
If as trustees you are looking at investing it is important to remember that the value of the trust investment funds and the income generated could possibly fall as well as rise. There is no guarantee you will get back more than you vested.
Consilium Asset Management are based in Chipping Sodburychipping Sodbury and offer a unique Trustee investment management service for individual and corporate trusts.
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