Trustees have a clear duty to act in the best interests of the beneficiaries. Unfortunately, many trustees have believed, historically, that the best method of protecting the interests of their beneficiaries is to protect the capital.

Low Risk / Low Income Investment

Thus, they think it is best to invest in low risk/low income areas. Paradoxically, this works to the detriment of the beneficiaries in the longer term. It is important for trustees to note that they are not only required to consider the interests of the life tenant(s) but also those of the remaindermen. This apparent conflict coupled with restrictive investment options has left many professional trustees caught between a rock and a hard place, with the emergence of a number high profile cases.

The Trustees Act 2000

The Trustees Act 2000 has given professional trustees far greater investment freedom whilst making them more accountable. In addition, trustees are now required to seek investment advice and, in any event, it is recommended best practice for trustees to seek financial advice from a qualified financial advisor.

Since its inception over 10 years ago, The Trustees Act 2000 has provided a comprehensive update in a number of areas of trust law from the previous position. The scope and detail of the Act came as a surprise for many within the professional community, with an impact on areas wider than just purely investment.

Working with Qualified Financial Planners

More than 10 years on, there is a maintained strong emphasis to ensure that the investment mix of the trust adheres to modern portfolio theory and, given the requirement for trustees to seek advice, there has never been a greater need for professional trustees and qualified financial planners to work together.

For further information on trusts or any of the topics considered above, read our recent “A Matter of Trust: Passing on Your Wealth to Future Generations” blog post or contact Warde Graham's expert financial advisers & advisors, based in Glasgow in Scotland, today. Free initial enquiries for expert independent financial advice are available by phoning 0141 331 0660.