If you have set up a trust or were appointed as a trustee many years ago, you may be unsure of the importance of reviewing the trust assets and trust management. Historically, some Trusts have required minimal trust management, which can lead to a failure to review. However, it is essential that trusts are reviewed regularly to comply with the law and your obligations as a trustee. In this article, we provide you with an overview about the importance of trust reviews, how often you should review a trust and the dangers of failing to do so.
Do you need to review your trust?
Trusts are a very useful wealth management tool, often running for many years with little administrative burden. However, this can means that trusts are neglected or not managed as effectively as they should be. There have been many changes to the taxation of trust which require the attention of trustees, also changes to law firm structures, trust assets and investments which mean that the trust records may not be up to date. If you have an existing trust which has not been reviewed for some time, you may wish to obtain specialist legal advice and assistance sooner rather than later.
What is a trust review?
A trust review is an opportunity for trustees to review any changes to the trust. They should consider changes in the law, changes in the trust assets, performance of investments and any changes to the circumstances of the beneficiaries.
How often should you carry out a trust review?
In general, trustees should review the trust assets every year. The usual process is for trustees to hold a meeting to review the trust accounts, agreements outlining distribution of trust assets, the trust income and assets and to consider the trust strategy. As part of the review trustees may also consider storage of trust papers and other administrative matters.
There are also compliance matters which may need to be addressed, including:
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- Registration of the Trust with HMRC (recent changes to HMRC rules have made this particularly important for nearly every Trust to consider)
- Submitting an inheritance tax return to HMRC
The dangers of failing to regularly review a trust
Failing to regularly review a trust can have a broad variety of unwanted and unexpected consequences. Firstly, there may be tax consequences as a result of changes to the circumstances of the beneficiaries. There are many other compliance issues which may arise, which can vary greatly depending on the trust administration and assets. Secondly, trustees may be failing in their legal duties where they do not review the Trust assets. If you are unsure about how to review a trust, or it has been some time since a trust review was carried out, you should contact a specialist solicitor for advice.
Specialist Trusts Solicitors, Edinburgh
Murray Beith Murray Partner, Andrew Paterson, is an expert in estate planning and asset protection with trust expertise. To get in touch, call on 0131 225 1200 or complete our contact form.
Murray Beith Murray was established in 1849, as advisors for generations of clients, committed to our values of integrity, expertise and trust. This aim and these values continue to this day as does our commitment to be here when you need us.