Investment Advice for Trustees
September 2nd, 2010Since the introduction of The trustee Act 2000, trustees now have specific responsibilities concerning the service and administration of trust funds. The duty of care is applicable to professional and lay trustees. Yet higher standards are expected from professional trustees.
A legal duty of care applies to the trustee investments that are contained within the trust. For existing and new trusts, the trustees must take into account the trusts aims and the suitableness of the investments to be held.
Trustees have a duty 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 investment funds in the trust, funding, the type of arrangement and the demands of the beneficiaries.
A wide-ranging portfolio of assets should be used to meet the trusts special objectives.
This type of approach can help to limit the volatility within the trust investment by vesting across several asset categories. It is fundamental to take into account risk any particular requirements of the trustees. This could also include placing investments 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 an endless and protracted process, specially if the trust executives are not practiced investors.
Trusts and Independent Financial Advice.
It is essential to seek individual and impartial advice on the assets held within any form of trust arrangement. We continually advise new and existing trustees on suitable asset allocation investment strategies.
Trustees often engage the investor services of a bank or stockbroker. Sometimes the service is not particular to the demands of the individual trust. A 1 size fits all philosophy may not take into consideration the personal needs of the trust. For example, the prerequisites of a large educational trust will be totally different to a small family trust.
The costs to administer the investments are an important element. The admin fees charged by banks and stockbrokers for trust investment management can be expensive. This can have an affect on the returns the trust can accomplish.
Our investment procedure takes into account the fee, as this is a well-known component when we recommend unique investment funds.
If as trustees you are deliberating about vesting it is critical to remember that the value of the trust investment and the income generated could fall as well as rise. There is no guarantee you will get back more than you invested.
Consilium Asset Management are based in Chipping Sodbury and offer a unique Trustee investment management service.