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The impact of the Trustees Act 2000 on professional trustees

Trustees have a clear duty to act in the best interests of the beneficiaries. Unfortunately many trustees have historically believed that the best method of protecting the interests of their beneficiaries is to protect the capital. They therefore invest in low risk/low income areas which, perversely actually disadvantage beneficiaries over the longer term. Trustees however are not only required to consider the interests of the life tenant(s) but also those of the remaindermen (is this just a US legal term?). This apparent conflict coupled with restrictive investment options has left professional trustees caught between a rock and a hard place and resulted in a number of high profile cases.

26 September 2001

By Duncan Ellis, Lighthouse Wealth Management

Trustees have a clear duty to act in the best interests of the beneficiaries. Unfortunately many trustees have historically believed that the best method of protecting the interests of their beneficiaries is to protect the capital. They therefore invest in low risk/low income areas which, perversely actually disadvantage beneficiaries over the longer term. Trustees however are not only required to consider the interests of the life tenant(s) but also those of the remaindermen (is this just a US legal term?). This apparent conflict coupled with restrictive investment options has left professional trustees caught between a rock and a hard place and resulted in a number of high profile cases.

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. This article aims ...

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