Trustee Duties and Responsibilities: A Plain English Guide

Accepting a trusteeship is not a formality. From the moment you are appointed, you assume a set of legal duties that persist until you are formally discharged. Those duties are not optional — they are legally enforceable, and breaching them can result in personal liability. If you are being asked to become a trustee, or you already are one, this guide explains what the law expects of you.

The Core Duty: Fiduciary Responsibility

A trustee is a fiduciary — someone who holds a position of trust and is legally required to act in the interests of the beneficiaries, not their own interests. This is the foundational principle from which all other trustee duties flow.

Acting in your own interest, or preferring one beneficiary over others without proper justification, is a breach of fiduciary duty. So is failing to act at all — passivity is not protection. Trustees who take no action when action is required are as exposed as those who act wrongly.

The Duty to Act in the Best Interests of Beneficiaries

Trustees must always act in the best interests of the beneficiaries as a whole. For discretionary trusts, this means considering all beneficiaries — not just the most vocal, the most needy, or the ones the settlor favoured in their letter of wishes.

Where there are competing interests — for example between current income beneficiaries and those entitled to capital in the future — trustees must balance those interests fairly and without bias.

The Duty of Impartiality

Closely related to acting in the best interests of all beneficiaries is the duty of impartiality. Trustees must not favour one beneficiary over another without proper reason grounded in the trust deed or the interests of the trust as a whole.

In practice, this means keeping records of how decisions were made, what information was considered, and why one course of action was chosen over another. The decision-making process is as important as the decision itself.

Investment Duties

Unless the trust deed restricts or expands their investment powers, trustees are governed by the Trustee Act 2000, which gives them wide investment powers but also imposes a duty to invest as a prudent person would — having regard to the needs of the trust and the interests of the beneficiaries.

Trustees must review investments at appropriate intervals, consider professional advice where the size of the trust warrants it, and document their investment decisions and the reasons for them.

Frequently Asked Questions

Can a trustee be paid for their role?

Trustees cannot charge for their services unless the trust deed expressly authorises payment, or all beneficiaries consent. Professional trustees (solicitors, accountants, trust companies) typically include a charging clause in the deed.

Can I resign as a trustee?

Yes, but resignation requires a formal deed and must comply with the Trustee Act 1925. You cannot resign if doing so would leave the trust with no trustee or fewer than the minimum required by law.

Do all trustees have to agree on every decision?

For most decisions, trustees must act unanimously. Some trust deeds allow majority decision-making, but this must be expressly provided for. Any disagreement should be documented.

What is a breach of trust?

A breach of trust is any act or omission by a trustee that is inconsistent with their duties under the trust deed or general law. It ranges from technical breaches with no real loss to serious misconduct causing significant financial damage.