Trust Investing
Since the introduction of The trustee Act 2000, trustees now have specific duties concerning the service and admin of trust funds. The responsibility is applicable to professional and lay trustees. However higher standards are expected from professional trustees.
A statutory duty of care is applicable to the trustee investments that are held. For new or existing trusts, the trustees must take into consideration the trusts aims and the suitableness of the investments to be held.
Trustees have an obligation to protect the asset value of the trust fund, whilst offering income for the beneficiaries. It is critical for trustees to think about the suitability of the investment funds held, funding, the type of trust arrangement and the requirements of the beneficiaries.
A diversified portfolio of assets should be used to meet the trusts unique objectives.
This approach can help to reduce the risks within the trust investment funds by placing across individual asset classes. It is critical to take into account risk any particular prerequisites of the trustees. This could also include consider investing in an ethical or sociably responsible style.
Trustees have an administrative obligation to survey the assets held within the trust on a regular basis. This can be a prolonged and lengthy process, specially if the trust decision makers are not experienced investors.
Trusts and Financial Advice
It is important to seek individual and unprejudiced advice on the assets held within any form of trust arrangement. We regularly advise new and existing trustees on suitable asset allocation investment strategies.
Trustees frequently engage the investor services of a bank or stock-broker. Sometimes the service is not unique to the needs of the individual trust. A 1 size fits all approach may not take into account the specific needs of the trust. E.g., the requirements of a large educational trust might be different to a small family trust.
The costs to administrate the investment funds are an important component. The admin charges charged by stockbrokers and banks for trust investment funds management can be expensive. This might impact on the investment returns the trust can accomplish.
Our investment funds process takes into account the fee, as this is a recognized component when we advocate specific investments.
If as trustees you are thinking about vesting it is important to remember that the value of the trust investment funds and the income generated could possibly fall as well as rise. There is no guarantee you will get back more than you vested.
Consilium Asset Management are based in Chipping Sodbury and offer a unique Educational Trustee investment management service Education trusts.