City Investments of Chester

A basic guide to the Investment Responsibilities of Trustees


Ensure that the trust fund is invested.


Trustees have a fundamental duty to invest the trust fund so that the beneficiaries’ interests (whether in terms of income or capital growth) are enhanced.
The duty of the trustees in relation to investment is to use their powers in the best interests of all beneficiaries. This includes current and future beneficiaries.
Trustees should also consider whether they are under any duty to sell any part of the trust property.


Investment duties


Trustees can access a wide range of potential investments. Which particular product, or combination of products, is used depends on the specific requirements of each trust.


A trustee must periodically review the investments and consider whether taking into account the standard investment criteria, investments need to be varied.


The standard investment criteria are:

What are the trustees’ duties in relation to investment?


“Trustees must invest the trust fund and not simply sit on cash. Assets must be acquired (or retained) to produce a financial return for the trust.” [Stone v Stone (1869) 5 Ch App 74]


Trustees have a duty of care.


“The duty of the trustee is not to take such care only as a prudent man would take if he had only himself to consider, the duty is rather to take such care as an ordinary prudent man would take if he were minded to make an investment for the benefit of other people for whom he felt morally bound to provide.” [re Whiteley) (1886) 33 ChD 347]


The duty of the trustees in relation to investment is to use their powers in the best interests of current and future beneficiaries.


“In the case of a power of investment, as in the present case, the power must be exercised so as to yield the best return for the beneficiaries, judged in relation to the risks of the investments in question; and the prospects of yield of income and capital appreciation both have to be considered in judging the return from the investment.” [(Cowan v Scargill) [1984 3 WLR 501]
Trustees should obtain the best rate of return regardless of their own, or the beneficiaries’, political, social or moral views.


Trustees have a duty to seek ‘proper’ advice unless they conclude that in all circumstances it is unnecessary to do so.


Source Prudential Summer 2016


The above is a basic guide only. It does not aim to cover all eventualities of trustee investment details. Professional advice should be sought before taking any action

 

City Investments - Independent Financial Advisers in Chester