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Description of this module
More and more people are establishing trusts, be it for family assets or as an investment/business trust. Or at the very least they are talking about it.
Having a trust has become something of a trend, and anybody that has established a trust since October 2011 has also likely encountered the necessity for “trust maintenance”.
So what is trust maintenance, why is it important, and what do you need to do?
Trust maintenance means taking your trust seriously - attending to regular meetings and resolutions; and treating your trust as a genuine entity (not unlike how you might deal with a company).
Following the abolition of gift duty in October 2011, all debt owing from a trust to an individual can now be gifted in one transaction known as a “super gift”. As a result, the need for an annual gifting programme effectively became obsolete and the holding of annual trust meetings, and passing annual trustee resolutions, went out the window for a lot of people. This has created a real risk that trusts may not be properly maintained.
These changes to the gifting requirements accompanied by increased enforcement of insolvency legislation, have induced more frequent trust litigation. Being able to demonstrate professional and ongoing maintenance of your trust will minimise the possibility of trustees being held personally liable for any breach of their duties under the Trustee Act 1956, as well minimise the risk of any “sham trust” accusations. Insufficient, or non-existent, trust maintenance unnecessarily exposes your trust (and critically your trust assets).
As a bare minimum it is critical for your trustees to sign annual resolutions, hold trustee meetings, and conduct the business expected of the trust in order to appropriately sustain and evidence the existence of your trust.
Get in touch with us to discuss the maintenance of your trust in more detail. We can assist to assess where your trust stands at present, or to explore what can be done to improve your trust’s health.
Get in touch for an initial telephone consultation.
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