Trust record keeping
Trust record keeping continues to be a problem area for many trustees (although many trustees don't know it).
Trust records can be anywhere. When I've needed to review them I've often received them in shoe boxes, shopping bags, cardboard boxes and folders. It's not unusual to find important records missing or lost.
Trust records become important when:
Trustees need to review what has taken place in the past
Trustee decisions are questioned or challenged (sometimes years later)
Beneficiaries ask for information
Trustee induction or a new trustee wants to see how things are done
Trust records are being passed over to new trustees for the trust
Trust records need to be kept for the life of the trust.
So what sort of records should trustees be keeping? There are two types of records I’d recommend trustees keep a close eye on:
The first is the originals of important documents. These include the trust deed, variations to the trust deed or to the beneficiaries of the trust, deeds of appointment or retirement of trustees, written contracts (e.g. leases), trust creator wishes, title documents and the trustees Minute Book of decisions made in the trust.
The second is key paper work. This paper work is best held on a Trust File and includes copies of the important documents (mentioned above), Investment Policy Statements, financial statements (recording trust assets, liabilities, income and expenses), advice received by the trustees, paperwork to support significant decisions made, details of insurances, trustee meeting or file notes, general correspondence and information on the trustees and beneficiaries of the trust.
Compiling and maintaining trust records involves work and has a value. Be prepared to pay a professional to do this work for you if you need a hand.
Three good practices for trustee record keeping I’d recommend are:
Hold trustee records in one place so they can be easily accessed when needed
Have one trustee take responsibility for compiling and maintaining the records
Use a Trust File for key paper work (or use one of the electronic trust management systems now available)
Keeping trustee records is no different to mowing your lawns. The problem just grows worse if you don’t keep on top of it. Left for too long, it invites unnecessary problems or risk.
Trust good practice.
Lindsay