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What are the duties of trustees?

What are the duties of trustees?

The CII exam on trusts is J02; the exam is 2 hours long with 15 short-answer questions giving a total of 130 marks. Here is an example question that will help exam candidates answer questions on the duties of trustees.

One question that often appears in the exam tests the duties of trustees:

Example Question

State eight relevant duties and responsibilities of the trustees in respect of a discretionary trust invested in commercial property and equities.

The model answer was given as:

  • Must adhere to the trust deed/Trustee Act 2000
  • Ensure they are registered as the legal owners/hold the title deeds to property
  • Act in the best interests of the beneficiaries with due diligence and integrity
  • Avoid conflicts of interest
  • Treat property as if it were their own
  • Protect trust property
  • Keep proper accounts
  • Review investments
  • Ensure investments are suitable/diversified (standard investment criteria)
  • Obtain professional advice if appropriate
  • Invest cash appropriately
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There were two parts to this question, and the other part tested the statutory position regarding replacing someone who no longer wanted to act as trustee.

The model answer to this was:

  • Replacement trustees can be appointed under s36 of the Trustee Act 1925:
  • When the trustee is outside the UK for longer than 12 months
  • When they wish to be discharged or retired
  • When they are refusing to act
  • When they are unfit to act

Remember that trustees are the legal owners of the trust property; therefore they must be over the age of 18 and of sound mind.  Any number can be appointed (unless the trust property is land, where the minimum is two, unless one is a trust corporation, and the maximum is 4).

Trusts are of course also tested in AF1, so having knowledge of a trustee’s duties is important for anyone studying either of these exams.

Grab the resources you need!

If you’re studying for your CII AF1 exam, and you’re aiming for a comfortable pass, you need to get all the practice you can. Grab our free taster to try out one of Brand Financial Training’s resources for yourself.  Click the link to download the AF1 mock paper taster now!

Click here to download our free taster mock paper for CII J02


Alternatively, you can download taster resources for AF1, AF5, R01, R05 or R06 if one of those exams is on the horizon for you.