Rules of Service

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The general guidelines for a UK trust service —i.e., the responsibilities of the Trustees —are governed by a combination of trust law, the specific terms of the trust deed, and various UK tax and anti-money laundering regulations.

Here are the key general guidelines and responsibilities:

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1. Fiduciary Duties and Standard of Care

 

• Act in the Beneficiaries' Best Interests: The overriding duty is to manage the trust assets solely for the beneficiaries' benefit, in accordance with the terms of the trust deed.

• Exercise Due Skill and Care: Trustees must exercise the same standard of care and skill that a prudent person would when managing the affairs of others. 

• Act Impartially: If there are different beneficiary classes (e.g., income beneficiaries and capital beneficiaries), trustees must be fair and impartial to all groups.

• Avoid Conflict of Interest: Trustees must not profit from their position or allow a conflict to arise between their personal interests and their duty to the trust.

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2. Asset Management and Administration

 

• Preserve and Protect Assets: Trustees must take control of and safeguard the trust assets (the 'trust fund').

• Invest Responsibly: They must exercise their statutory investment powers (primarily under the Trustee Act 2000) and follow the investment strategy set out in the trust deed, ensuring investments are suitable and diversified.

• Maintain Accurate Records: Full and proper accounts and records of all trust transactions must be kept.

• Distribute Assets: They must distribute the trust's income and/or capital in accordance with the trust deed and, in the case of a discretionary trust, exercise their discretion appropriately.

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3. Legal and Regulatory Compliance

 

• Registration with HMRC: Most UK express trusts (with only a few specific exceptions) must be registered with HM Revenue & Customs (HMRC) via the Trust Registration Service (TRS).

  • This includes providing details of the settlor, trustees, and beneficiaries.

  • The information on the TRS must be kept accurate and updated within 90 days of any change.

• Tax Compliance: Trustees are responsible for calculating, reporting, and paying any relevant taxes, including:

  • Income Tax (on income generated by the trust).

  • Capital Gains Tax (CGT) (on any profits from the sale of trust assets).

  • Inheritance Tax (IHT) (which can apply on creation, every 10 years, and on exit of assets from the trust).

• Anti-Money Laundering (AML): Trust services are subject to UK AML regulations, requiring trustees to carry out 'Know Your Customer' (KYC) checks on the settlor and beneficiaries.

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4. Accountability and Information

 

• Provide Information to Beneficiaries: Trustees have a duty to inform beneficiaries of the existence of the trust and, generally, to provide them with information about the trust's administration and assets, although the extent can depend on the type of trust and the beneficiaries' interest.

• Honesty and Integrity: All dealings must be conducted with the utmost honesty and professional integrity.

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Important Note: This is a summary of the general guidelines. The specific responsibilities of a UK trust service (or its Trustees) will always be determined by the unique trust deed and the type of trust established (e.g., bare trust, discretionary trust, or interest-in-possession trust).