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Bonds for Trustee Investments

We can guide and assist Trustees to ensure they comply with their duties and responsibilities, as codified in the Trustee Investment Act 2000 which defines a trustee’s duty of care. Part of the duty of care is to ensure the suitability of any investment and to ensure diversification and the spreading of risk. Section 5 of the Act obliges trustees to seek “proper advice” and we can ensure compliance with this requirement. Further assistance can be given with reporting tax charges relating to bonds for trustee investments to HMRC.

As part of this service we have a Suitability Questionnaire which Trustees can complete which establishes the risk profile required and their capacity for loss, or the amount of volatility they are prepared to accept. If there is already a trust deed, we need to obtain a copy to ensure it is acceptable to the investment bond provider. If no trust exists and we need to write a new one, there is likely to be a charge for this which will depend on the complexity and time spent writing a new trust. We can show trustees how to select a suitable trust for their requirements and this will depend on the residence of the trust, domicility of the Settlor, access to capital, access to income, taxation of the trust and the ability to change the beneficiaries later.

We can also assist the beneficiaries as and when they become entitled to the bond, or a portion of the bond held in trust. This can involve ensuring assignments and distributions are made in the most tax efficient way possible, as well as helping the trustees or executors with their probate responsibilities.

Here are the steps a Trustee needs to take before establishing the bond:

1. If there is a pre-existing trust let us check it for suitability.
2. Complete a Suitability Questionnaire.
3. If there is no pre-existing trust allow us to suggest suitable options to consider.
4. Select a “lead trustee”. If there is more than one trustee a lead trustee will be the individual who we liaise with. This does not preclude the others from being involved in the process.
5. Consider our advice and recommendations. We will write a Suitability Report explaining what we are recommending and why. Click here to see an example of a Example_Investment_Bond_Report.
6. If the trustees are in consensus we can proceed to the implementation phase. This involves verifying the identity of all of the trustees for anti-Money Laundering purposes. We will also help you with all of the forms, which for this type of investment can be complex. Once the bond is set up we may be able to offer online access to some or all of the trustees, as long as this is allowed by the investment bond provider.
7. We can help with on-going monitoring and supervision of the investment bond. Should there be a need to switch funds in the future or make distributions this is covered by our on-going advisor charge.
8. To a limited extent we can help with the taxation reporting requirement of the trust but it should be noted that this will remain the responsibility of the trustees and that we are not give accounting advice. We can however show you how to report and when.