Meeting Annually as Trustees

Posted: 2nd June 2010

Holding an annual trustee meeting is something that is often overlooked but is, in fact, very important.  Many people believe that where a trust simply owns the family home, there is no need for a meeting.  But holding a trustee meeting is critical to discharge the trustees' legal duties, no matter the size of the trust fund.

•  The trustees have a legal duty to know the terms of the trust and to apply them to its management.  An annual trustee meeting is an ideal time for the trustees to review trust documents and the assets of the trust.
• The trustees have a legal duty to manage the trust with diligence and prudence-as they would their own affairs.  The security of assets can shift, and it is important for the trustees to review investments to ensure these still meet with the terms of the trust deed and are in the best interests of the beneficiaries.
•  An annual trustee meeting can ensure that all trustees are involved in the decisions of the trust and provides a forum to discuss any trust issues.
•  An annual trustee meeting is evidence of a valid trust.  It demonstrates an intention of the trustees to act in that role.

 

So, what should be discussed at the annual trustee meeting?  The financial statements  of the trust should be available and form the basis of the trustees review.  If there are no financial statements, then it is a good idea to prepare prior to the meeting a schedule of the assets and liabilities of the trust. 

 The trustees should review the transactions of the trust since the last annual trustee meeting and ask:-

•  Have investments been performing well?
• Have all trust transactions been minuted by the trustees?
• Are all transactions reflected in the financial statements?

 The trustees should review the assets and liabilities of the trust and consider:-

•  Do the trust assets meet with the express objectives of the trust, as set out in the trust deed or the trustees investment policy (if there is one)?
•  Are the assets well maintained?  Is any maintenance necessary or capital expenditure planned for the coming year?
•  Are all assets insured?  Is the quantum of cover still adequate?
•  Are all liabilities of the trust being met?  Is the level of debt exposure appropriate for the trust?

 

The trustees should discuss possible investments and future plans for the trust fund.  If the trust has a financial or investment advisor, then a report from that advisor should be received and considered. 

 The trustees have a duty to consider beneficiaries and whether a distribution of trust income or capital should be made.  This should be considered at each annual trustee meeting. 

 Any general matters can be discussed at the end and in order to ensure this good practice is continued, the trustees should schedule the next meeting.

 Following the meeting, the trustees should minute the outcomes of the meeting.  The trustees' discussion and reasoning need not be recorded.  Trust meetings  will differ depending on the purpose, assets and beneficiaries of each trust.  Our suggestions are only examples and not exhaustive.  The most important thing is to make sure an annual trustee meeting is held.

  

Source: Hesketh Henry