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Charities and Duties of Trustees

When a person agrees to take on a position as a trustee, the prospective trustee must be aware of the duties that are imposed on him by virtue of his office and by statute. The Charities Act provides that a person who has general control and management of the administration of a charity will be treated as a trustee of that Charity as will a director of a charitable company.

General Duties of Trustees of Charities and Charitable Companies

The first duty of a trustee is to ensure that he has a thorough understanding of the trust for which he will act. Investigations must be carried out to ensure that he understands the terms of the trust; that is, whom he is acting on behalf of and why he's doing so. Often it is useful to understand how the trust has arisen and the circumstances that surrounds the trust establishment.

The trustee has a duty to adhere to the terms of the trust then to carry out those terms as long as they are enforced. He must perform his duties in accordance with any laws that are attached to the administration of the trust.

A trustee must act to such care and skill as is reasonable bearing in mind any special knowledge or experience he has. This is particularly relevant for professional trustees who may reasonably be expected to have special knowledge or experience.

A trustee must not breach any duty he has towards the trust. He must not put at risk trust property and in carrying out his duties he must put his own interests aside.

Duty to Obtain Advice

The Trustee Act 2000 imposes a duty on trustees to obtain and consider proper advice about the way in which their power of investment should be exercised, having regard to the standard investment criteria. The duty also extends to obtaining advice on decisions about whether the investment should be varied. In this context “proper advice” means “the advice of a person who is reasonably believed by the trustees to be qualified to give it by his ability in and practical experience of financial and other matters relating to the proposed investment”. There is one exception to the need to obtain advice and that is where the trustees reasonably conclude that in all the circumstances it is unnecessary or inappropriate to do so. This might apply where the trustees themselves have particular expertise or where the trust fund is very small.

There are numerous administrative duties to consider, however the main ones are as follows:

  • the property investment and preservation of the trust assets;
  • the duty to consider whether powers and discretion should be exercised;
  • the provision of information to the beneficiaries;
  • the need to keep clear and up-to-date accounts.

For futher information about Duties of Trustees of Charities and Charitable Companies, contact Aaron Spencer or any member of the Charity Law team.

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