19th August 2010
Investment Advice for Trusts
Since the introduction of The trustee Act 2000, trustees now have particular responsibilities concerning the serving and admin of trust funds. The responsibility is applicable to lay and professional trustees. However higher standards are expected from professional trustees.
A statutory duty of care applies to the trustee investments that are held. For existing and new trusts, the trustees must take into consideration the trusts objectives and the suitableness of the investment funds to be held.
Trustees have a duty to protect the value of the trust fund, whilst providing income for the beneficiaries. It is critical for trustees to think about the suitability of the investment funds held, funding, the type of arrangement and the demands of the beneficiaries.
A wide-ranging portfolio of assets should be used to meet the trusts particular targets.
This approach can help to reduce the risks within the trust investment by vesting across various asset categories. It is important to take into account risk any unique prerequisites of the trustees. This could also include consider investing in an ethical or sociably responsible style.
Trustees have an administrative duty to re-examine the assets contained within the trust on a regular basis. This can be a time-consuming and lengthy process, especially if the trust executives are not seasoned investors.
Trusts and Financial Advice
It is important to seek unbiased and impartial advice on the assets held inside any form of trust agreement. We regularly advise existing and new trustees on suitable asset allocation investment strategies.
Trustees often engage the investor services of a bank or stockbroker. Occasionally the service is not particular to the demands of the individual trust. A 1 size fits all approach may not take into consideration the individual needs of the trust. E.g., the prerequisites of a large educational trust could be totally different to a small family trust.
The costs to administer the investments are an important component. The admin charges charged by banks and stockbrokers for trust investment funds management can be high. This could impact on the investment returns the trust can achieve.
Our investment funds process takes into account the fee, as this is a recognized component when we recommend specific investments.
If as trustees you are deliberating about vesting it is essential 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 vested.
Consilium Asset Management are based in Chipping Sodbury and offer a unique Educational Trustee investment management service Education trusts.
