Investment Advice for Trusts
Since the introduction of The trustee Act 2000, trustees now have special duties relating to the service and administration of trust funds. The duty of care applies to professional and lay trustees. Still higher standards are expected from professional trustees.
A legal duty of care is applicable to the trustee investment funds that are contained within the trust. For new or existing trusts, the trustees must take into consideration the trusts aims and the suitability of the investments to be held.
Trustees have an obligation to protect the asset value of the trust fund, whilst providing income for the beneficiaries. It is essential for trustees to think about the suitableness of the investment funds held, funding, the type of trust arrangement and the demands of the beneficiaries.
A diversified portfolio of assets should be used to meet the trusts specific aims.
This type of approach can help to reduce the risks within the trust investment funds by placing across varied asset categories. It is critical to take into account risk any particular prerequisites of the trustees. This could also include investing in an ethical or sociably responsible way.
Trustees have an administrative obligation to survey the assets held within the trust on a regular basis. This can be an endless and lengthy process, especially if the trust executives are not knowledgeable investors.
Trusts and Independent Financial Advice.
It is fundamental to seek independent and unprejudiced advice on the assets held inside any form of trust agreement. We regularly advise new and existing trustees on acceptable asset allocation investment strategies.
Trustees frequently engage the investor services of a bank or stockbroker. Sometimes the service is not specific to the needs of the individual trust. A one size fits all approach may not take into consideration the personal needs of the trust. E.g., the requirements of a large educational trust should be different to a small family trust.
The costs to administrate the investment funds are an all-important element. The admin fees charged by banks and stockbrokers for trust investment advice can be high. This could have an affect on the returns the trust can accomplish.
Our investment procedure takes into account the charges, as this is a recognized factor when we advocate particular investments.
If as trustees you are considering investing it is critical to remember that the value of the trust investment and the income generated could fall as well as rise. There is no guarantee you will get back more than you vested.
Consilium Asset Management are based in Chipping Sodburychipping Sodbury and offer a unique Trustee investment management service for individual and corporate trusts.