August 16, 2010
Trust Investing
Since the introduction of The trustee Act 2000, trustees now have unique obligations concerning the service and admin of trust funds. The duty of care is applicable to lay and professional trustees. Still higher standards are expected from professional trustees.
A statutory duty of care applies to the trustee investments that are contained within the trust. For new or existing trusts, the trustees must take into consideration the trusts objectives and the suitability of the investment funds to be held.
Trustees have an obligation to protect the value of the trust fund, whilst offering income for the beneficiaries. It is crucial for trustees to consider the suitableness of the investment funds held, funding, the type of trust arrangement and the requirements of the beneficiaries.
A varied portfolio of assets should be used to meet the trusts particular objectives.
This approach can help to reduce the volatility within the trust investment by putting across individual asset classes. It is essential to take into account risk any special prerequisites of the trustees. This could also include vesting in an ethical or sociably responsible manner.
Trustees have an administrative obligation to review the assets contained within the trust on a regular basis. This can be a prolonged and protracted process, especially if the trust executives are not experienced investors.
Trusts and Independent Financial Advice.
It is essential to seek unbiased and impartial 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 frequently engage the investor services of a bank or stockbroker. Sometimes the service is not particular 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 Instance, the requirements of a large educational trust would be totally different to a small family trust.
The costs to administer the investment funds are an important factor. The admin fees charged by stockbrokers and banks for trust investment funds advice can be expensive. This can impact on the returns the trust can achieve.
Our investment funds process takes into account the costs, as this is a recognized component when we recommend unique investments.
If as trustees you are thinking about vesting it is fundamental to remember that the value of the trust investment and the income given could possibly fall as well as rise. There is no guarantee you will get back more than you invested.
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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