Trust documents and administration

Trust documents & administration

Trusts need careful planning and administration to achieve their objectives and protect the trust assets and trustees as much as possible from legal claims.

Trust core documents

The Trusts Act 2019 requires trustees to keep core trust documents.

Core documents include:

• Trust deed and variations to the deed
• Details of assets and liabilities
• Records of the trust property that identify the assets, liabilities, income and expenses of the trust.
• Records of trustee decisions
• Written contracts
• Accounting records and financial statements
• Appointment and removal of trustees
• Letter or memorandum of wishes by the settlor
• Any other documents necessary for the administration of the trust.

Trust financial statements

The Trusts Act 2019 requires trustees to prepare financial statements.

Financial statements plot the journey of the trust and give a financial snapshot of the trust on its annual balance date. They are a key tool for managing and reviewing the trust and give the trustees the information they need to administer the trust and exercise their powers and duties.

Trust administration

• Trustees must not mix trust and personal finances. They must open a separate bank account for the trust. They must deposit all trust income into the trust bank account and pay all trust expenses and distributions from the trust bank account. If there is not enough money in the trust bank account to pay an expense, someone must deposit money into the account to cover the expense (i.e. lend to the trust) or arrange a bank loan.
• Trustees must not use the trust’s bank account for personal transactions.
• Trustee decisions must be unanimous. Trustees should record all important decisions in a written trustees’ resolution. The resolutions should be kept in a trust minute book. Important resolutions include to buy, sell, borrow, lend, guarantee, lease and distribute.
• Trustees should meet at least annually, to review the trust investments, financial statements and needs of beneficiaries.
• A trustee should seek advice from a solicitor or accountant if in doubt about anything concerning the trust administration or the actions of other trustees.
• A payment from the trust to or on behalf of a beneficiary is a distribution. It does not need to be repaid unless the beneficiary agrees in writing that it is a loan (for example, a payment to an adult child and his/her partner to help them buy or improve a house or reduce their mortgage). A Deed of Acknowledgement of Debt prepared by a solicitor is necessary if the payment is to be a loan and not a gift.

How we can help

At Raymond Khouri Chartered Accountants we have extensive experience and offer specialist advice on creating and managing your trust.

Ask us about our Trust Administration, Trust Accounting and Trust Tax services.

We also offer our Trust Risk Review service. It includes:

• Checking that deeds and minutes are up to date and on file
• Checking that registers recording trustees, beneficiaries, significant events and gifting are properly maintained
• Ensuring that the trustees are undertaking a regular and appropriate review of trust investments and other strategies for the future
• Checking that your Wills, Powers of Attorney and Memorandum of Wishes are up to date

More information about trustee duties and trust documents

The Trusts Act 2019 – Trustee Duties and Beneficiary Rights