Trusts - planning and compliance

Acting as a trustee is an interesting role with a whole host of responsibilities and duties.

Trusts can range from simple bare trusts with a single asset and beneficiary, to ‘new’ lifetime trusts set for a specific purpose and with a full range of powers and provisions, to will trusts established to facilitate further planning after death, or ‘historic’ trusts with challenges in terms of modern trust principles and powers. All different types of trust should be considered carefully to make sure that appropriate action is being taken.

A well administered and actively managed trust can be a very useful tool, which can be used flexibly and protectively for a whole host of valuable purposes. With the right systems in place, it should be straightforward to manage a trust as a positive factor rather than a burden.

Our experienced team brings together legal, accounting and taxation knowledge and specialist dispute expertise to meet any challenges that might arise when managing a trust. We can actively consider any trust structures as part of a family’s wider succession strategy if appropriate.

How we can help – planning

Trustees may have a defined plan in place for the use of the trust or might need some assistance to review and create a strategy. Either way, you’ll need to address the following from time to time:

what are your duties and powers, considering the terms of the trust and the law? What factors need to be taken into account, what actions are necessary, and what are possible?
what’s the ongoing ‘purpose’ of the trust and how can it be used to provide benefit to beneficiaries now and in the future?
how often should you meet, what should be on the agenda and how should discussions and decisions be recorded?

We can help trustees to:

undertake a full ‘health check’ of the trust and make appropriate recommendations
change trustees including advice on indemnities
provide benefit to beneficiaries (whether by the provision of lump sums, income, loans, use of an asset or with a transfer to a different structure)
change the terms of a trust (where possible) or take action to manage any defects
bring the trust to an end
ensure beneficiaries can take advantage of any tax opportunities
deal with any trust dispute or issues with fellow trustees or with the beneficiaries to minimise loss to the trust funds and maintain the ability to comply with duties

How can we help - administration

Alongside the ‘planning’ work, we can help trustees to establish an effective system (whether it be for a new trust or getting an older trust ‘back on track’) to ensure that you’re complying with the appropriate rules and requirements.

All trusts tend to require some ongoing management on a regular basis to deal with trust compliance requirements and a trustee may need to consider the following:

is the administration of the trust up to date and when was it last reviewed?
what do you need to do to comply with the annual trust compliance requirements? This may include information gathering, trustee meetings and dealing with annual accounts, trust tax and information sharing requirements (such as the Trust Registration Service, automatic exchange of information and the common reporting Standard)
is the investment of the trust assets actively considered and appropriate, including evidencing this in an investment policy statement?
are there any additional compliance requirements such as ten-year charges to inheritance tax or obligations arising as a result of exercise of the trustees’ powers, changes in circumstances or beneficiary distributions?

What our clients say about us?

“Mills & Reeve are excellent. Everyone always goes the extra mile to deliver an exceptional service within defined timescales.”

Chambers 2023 - High Net Worth

“Mills & Reeve has extensive knowledge but is also very good at putting technical information across to clients in a client- friendly way.”

Chambers 2023 - High Net Worth

Our approach

The appropriate level of service for your trust will depend on how much you’re willing and able to do yourself, the complexity, what the trust is being used for and what other professionals you have on board. We can offer a full-service option (compliance and planning) or we can complement the work carried out by others, like your accountants.

We have a trust corporation that can be appointed as a professional trustee, which means that we would be committed and obliged to ensure that all duties, powers and obligations are dealt with to the highest standard. Where the trust corporation acts in this capacity and the trust is ‘active’ we often deal with all compliance, planning and advisory work (excluding investment).

We currently carry out trust compliance work for some 500 active trusts and the Mills & Reeve Trust Corporation Limited acts as a professional trustee for approximately 540 trusts. Some recent examples of our work include:

advising the trustees of four historic trusts which had been set up by a deceased by will and during his lifetime to provide benefit to his second wife and preserve capital for his adult children – due to the passage of time, the beneficiaries felt that the arrangements were no longer in the spirit of the settlor’s wishes or cost effective and the trustees needed to find a solution which was in the best interests of all the relevant parties in terms of benefit, cost and taxation consequences
acting for a trust corporation in applying to court for a blessing of a momentous decision on how best to dispose of trust property in the face of serious disagreement between the beneficiaries, and dealing with one group of beneficiaries’ application for an order from the court requiring the parties to attend compulsory mediation.
helping the trustees of a trust with complex investments under
discretionary management to instruct an external investment specialist to review the performance of the trust investments and advise how this compares objectively to industry benchmarks
acting on a complex multi-trust litigation matter defending a professional trustee in respect of various breach of trust allegations by the beneficiaries. This matter included various interim applications and we reached a resolution by way of settlement agreement
acting for a set of trustees to fix a historic trust defect from before we were involved, making a successful court application (including complex jurisdictional and tax issues) which led to a large tax saving of millions for the beneficiaries