Acting as a trustee
- Publish date: 31 December 2015
- Archived on: 31 December 2016
ICAEW’s Business Law Department explains what members need to be aware of if they are asked to act as a trustee.
Accountants, whether ICAEW members or not, are often asked to act as trustees, particularly for voluntary organisations who value an accountant’s financial skill and acumen. It is flattering to be asked and tempting just to say ‘yes’ but as the updated guidance for members, “Acting as a trustee” explains there are a number of things members should consider before accepting an appointment, as well as during their tenure as a trustee and on their retirement or removal as a trustee.
Professional competence and due care
The first thing to remember is that, even if the role is voluntary and unpaid, a member will still owe a duty of professional competence and due care to the other trustees and the beneficiaries, as for any other professional service offering. If they are in practice, they will need to ensure that their firm’s Professional Indemnity Insurance (PII) covers their role as a trustee whether in a voluntary or professional capacity. Retired members and those not in practice will also need to ensure that they have sufficient cover to protect against a claim that could exhaust personal resources.
The updated guidance – scope
The updated guidance is intended as a general guide to ethical obligations and appropriate trustee behaviour. It is not a guide on how to run a trust on day-to-day basis nor is it a guide to the particular requirements of certain types of trusts and their trustees, such as charitable trusts, charitable companies, pension funds or trustee positions held by a licensed insolvency practitioner. For guidance on such trusts, members are advised to seek advice from the appropriate regulatory body such as the Charity Commission, The Pensions Regulator and the Financial Conduct Authority or from relevant professional or trade bodies.
Things to consider
“Acting as a trustee” outlines the considerations that should be taken into account by members before, during and after their appointment as a trustee.
These include, but are not limited to the following.
- Before accepting an appointment – members should consider whether they wish to be associated with the trust, undertake due diligence to satisfy themselves that they fully understand the risks associated with it and ensure that they understand the legal and taxation status of the trust and of trusts in general.
- On appointment – members should satisfy themselves as to the identity and nature of the assets and beneficiaries of the trust, review the accounting records to ensure the trust’s affairs are in order and that no breaches of trust have been committed in the past which need to be remedied.
- While a trustee – members should ensure they fully understand their responsibilities with regard to mistakes, particularly in the light of the 2013 judgement passed down in Futter and Pitt .UKSC26 (http://www.ashfords.co.uk/trustees,-mistake,-and-hastings-bass/).
- On retirement as a trustee – members will need to consult the trust document for any express conditions for retirement and ensure they meet any legal requirements for the valid discharge of their trusteeship.
The updated guidance provides further details of the many aspects to consider before, during and after a member’s term as a trustee, as well as links to useful sources of additional guidance and information.
Charity and Volunteer Special Interest Group
If in doubt, members are advised to seek independent legal or other specialist advice.