In these difficult times of Covid-19, it is important for trustees to consider the impact that this might have on their duties and responsibilities, and how best to comply with them.
For most trustees, their roles and responsibilities will not have changed. In this three part series, we will look at practical considerations that trustees could take into account, including how to take decisions, and how to execute documents.
In this first piece, we look at what issues trustees may need to consider.
Duties of trustees during Covid-19
Even during this global health crisis, trustees are still required to follow their duties which are set out within the various Trustee Acts and common law. In general, the duties of trustees are:-
- To comply with the terms of the trust;
- To act in the best interests of the beneficiaries, and impartially between them;
- To provide information to the beneficiaries when required;
- To act together and to be actively involved in decision making; and
- To deal with trust assets properly.
For most trustees, this will require very little change to their current day to day involvement with the trusts. However, as trustees are duty-bound to preserve the capital and to distribute income, decisions may need to be taken more swiftly.
Some issues include:
- Trustees managing or delegating responsibility for investment accounts may need to consider the virtues of altering their investment position against considering long term strategies and the possibility of an economic bounceback once the pandemic draws to a close.
- Those managing real estate, both commercial and residential, will need to consider how best to maximise returns by way of rental income against possible issues arising from bad publicity accusing landlords of heavy handed tactics when communicating with struggling tenants.
- On the other side, trustees may find that beneficiaries are making greater demands on the trust asses themselves. Those trustees holding assets which may be subject to a power of appointment will need to consider the short terms benefit to the beneficiaries of providing them with funds now, as against longer term strategies of retaining capital to provide long term income for the beneficiaries.
These are not easy questions for trustees to grapple with, and professional advice should be taken unless one of the trustees is suitably qualified to provide this advice.
In the next two parts, we will look at how trustees can make decisions during this time and how trustees can formalise their decisions by signing and executing documents.