What is a Trust, and why might the assessment of a Trustee’s capacity be necessary?
A Trust is a legal arrangement whereby one party, known as the settlor, transfers assets to another party, the Trustee, for the purpose of managing those assets for the benefit of a third party, the beneficiary.
Trusts can be intricate in nature, but when used correctly and managed appropriately, they can be highly effective in facilitating a controlled transfer of wealth and can be integrated into a comprehensive long-term tax planning strategy.
Types of Trusts include
- Bare Trusts
- Life Interest Trusts
- Discretionary Trusts
- Vulnerable Persons Trusts
- Charitable Trusts
Key roles in a Trust
- Settlor – The individual who establishes the Trust and deposits assets into it.
- Trustees – Those named within the Trust document who hold and administer assets or property held in a Trust for the benefit of a third party.
- Beneficiary – Trust beneficiaries are the individuals, charities or organisations for whose benefit the assets within the Trust are held and managed by Trustees.
The responsibilities of a Trustee
The responsibilities of a Trustee can be diverse and encompass a wide range of duties, including, but not limited to:
- Managing Assets in the Trust
- Following the rules of the Trust
- Complying with the common Law Duty of Care
- Maintaining accounts and paying taxes
- Act in the best interest of the beneficiaries
The Trustee Act 2000 extended the authority of investment trustees while safeguarding the interests of beneficiaries against misuse of these powers.
Trustees are vested with the authority to make all decisions pertaining to the Trust. Their responsibilities encompass the acquisition, application, and disposition of the trust’s assets. Furthermore, they are obligated to implement the Trust’s purposes for the benefit of the beneficiaries. Additionally, they must adhere to the rules and regulations of the trust and exercise reasonable care, skill, and diligence in making decisions and managing the assets of the Trust.
Assessing the mental capacity of a Trustee
The assessment of a Trustee’s capacity is governed by the Mental Capacity Act 2005. This assessment may be necessary when concerns arise regarding the Trustee’s diminishing or loss of mental capacity to effectively perform their role and fulfil the associated duties. The removal or replacement of a Trustee can indeed be a complex process, which may be initiated through the Trust document, the Trustee Act 1925, or by submitting an application to the Court of Protection (COP3). An appointed deputy for property and affairs can apply under Section 36 of the Trustee Act 1925 to act on behalf of the individual deemed to lack the mental capacity to act as a Trustee (COP3).
We welcome referrals from professionals, legal representatives, and members of the public who require the completion of a Trustee mental capacity assessment. At Thornton & Lee, our team of qualified mental capacity assessors possess extensive knowledge and experience in assessing Trustee capacity. We understand the key salient points to be discussed and evidenced within our robust Court standard reports, and importantly, ensure that the individual being assessed is supported and comfortable throughout the appointment. Contact our dedicated team today to obtain a complimentary, no-obligation quotation and how we can assist you with a Trustee capacity assessment.