Trusts are created for a variety of reasons; to manage assets for future generations, to provide protection for assets held by vulnerable adults, to assist with long term care planning or to resolve legal issues. Conducting a trust review involves thoroughly examining the establishment, administration, and compliance of a trust with legal requirements. When conducting a trust review we will aim to examine the following points.
1. Document Collection and Review
- Trust Instrument: Obtain and review the trust document itself, including any amendments or schedules.
- Trustee Records: Gather trustee records, including financial statements, investment documents, and distribution records.
2. Legal Framework and Compliance
- Applicable Laws: Identify and understand the jurisdiction’s trust laws governing the trust.
- Trust Compliance: Ensure the trust complies with legal requirements for its creation, administration, and termination.
3. Trustee Duties and Responsibilities
- Fiduciary Duties: Assess whether trustees have fulfilled their fiduciary duties, including loyalty, care, and prudent management of trust assets.
- Decision-Making: Review trustee decisions related to investments, distributions, and management of trust property.
4. Beneficiary Rights and Interests
- Beneficiary Rights: Ensure beneficiaries’ rights are protected and that distributions are made according to the terms of the trust document.
- Communication: Assess trustee communication with beneficiaries and provision of trust information as required.
5. Investment and Asset Management
- Investment Strategy: Evaluate the trustees’ investment strategy and ensure it aligns with the trust’s objectives and legal standards.
- Asset Management: Review how trust assets are managed, including valuation, diversification, and risk management practices.
6. Tax Compliance
- Tax Filings: Verify that the trust has complied with tax filing requirements, including income tax returns and any applicable estate or gift tax filings.
- Tax Planning: Evaluate tax planning strategies implemented to minimize tax liabilities for the trust and beneficiaries.
7. Record-Keeping and Reporting
- Documentation: Ensure comprehensive documentation of trust activities, including minutes of trustee meetings, financial records, and beneficiary communications.
- Accounting Practices: Review accounting practices to ensure accuracy and transparency in financial reporting.
8. Risk Assessment
- Risk Identification: Identify potential risks associated with trust administration, such as conflicts of interest, mismanagement of assets, or challenges to trustee decisions.
- Risk Mitigation: Recommend strategies to mitigate identified risks and improve trust administration practices.
9. Review and Recommendations
- Audit Report: Compile findings, observations, and recommendations into a formal audit report.
- Presentation: Present audit findings and recommendations to trustees, beneficiaries, and any other relevant stakeholders.
Next Steps
Please provide us with the trust document and any other relevant documents associated with it that require auditing. Please also specify any particular concerns or areas of focus you would like us to examine. This information will help us tailor the trust law review to address your specific needs effectively and ensure a thorough examination of trust administration practices.
Contact Linley James Solicitors on 0207 060 1210 to find out more about how we can conduct a trust review for you.