The Trustees

In a great many cases a trust is being set up for use with a life insurance policy, providing death benefits only. Occasionally, the insurance policy also includes critical illness and terminal illness protection. The trustees main objective is to ensure death benefits are paid as quickly as possible to the nominated beneficiaries and with the minimum amount of stress.

General Information


The precise responsibilities and powers of a trustee varies, albeit slightly, depending on the type of trust being set up.

In addition to reading this section, it is important to read the trust document and to make sure those responsibilities are understood and agreeable.  

A trustee is expected to exercise such care and skill as is reasonable in the circumstances.   Actions taken by a trustee must be authorised by the terms of the trust and the law that governs trusts. If any of the beneficiaries or trustees think that the trustee is not acting in their best interests, they can take legal action against a trustee if the trustee is acting outside the terms of the trust


Duties and Responsibilities

 Trustees should:

Tick sign - powers and duties of a trusteeMake themselves familiar with the powers and duties they have under the trust, and the rights of the beneficiaries.

Tick sign - powers and duties of a trusteeLook after the trust property for the benefit of the beneficiaries in line with the terms of the trust deed and trust law. In addition trustees must ensure trust property is passed to beneficiaries at the appropriate time.  


The property in the fund is called the trust fund. Trustees are responsible for ensuring the trust fund is invested for the beneficiaries until the money needs to be distributed. Where the only property in the trust is a life insurance plan, there will be no fund to invest until after any claim on the life insurance plan has been settled. The money from the life insurance plan will need to be invested until it is distributed to the beneficiaries of the trust.

 

Tick sign - how to treat beneficiariesConsider and treat all beneficiaries, irrelevant of trust class, fairly. Trustees are therefore expected to keep and maintain records where appropriate.

Tick sign - Trustees and Trust AssetsReview the assets within the trust periodically and consider whether changes need to be implemented. This is mainly relevant if the trust has investment benefits resulting from a death claim for example.

Tick sign - trustees and legal adviceSeek legal and financial advice from a qualified professional where investment of assets is required.


Trustees should take professional advice before investing the trust fund. If the fund is very small and where cost of advice would outweigh any benefit or if a trustee is qualified to give advice, it may not be necessary to seek professional advice. Trustees can request a professional  to act on their behalf in investing the fund, but the responsibility for the investment would still lie with the trustee.