Trustees have a duty to review the affairs of a Trust. Holding (at least) an annual trustee meeting can ensure that this duty is satisfied, and is also a useful means to better ensure the proper management of the trust. However, how should a trustee meeting be conducted?
It is important that all trustees attend the meeting, so set the date well in advance and ensure everyone can be present. If applicable, ask professional advisors to attend the meetings.
As for the conduct of the meeting, it is important to keep in mind that there is no such thing as the “controlling trustee.” Trustees are equally liable and none are permitted to take a passive role in trust management. A trustee meeting, while perhaps being chaired by one trustee, is an opportunity for all trustees to contribute to the management of the Trust.
It is important to set and follow an agenda so that all relevant matters are covered. During the meeting, the trustees may wish to:
- ascertain and discuss the objectives of the Trust and how they can be advanced in the coming year. Trustees are not required to make substantial profits, but they are required to invest prudently.
- update the schedule of assets and liabilities of the Trust. Pay particular attention to how well investments are performing and how much debt the Trust is open to.
- review and sign off the financial statements of the Trust. For a single residential property owning Trust, this may simply be a Balance Sheet recording the ownership of the property and how it is financed (Trust capital, settlor / beneficiary loans, and external debt). For Trusts earning investment income, and Trading Trusts, the financial statements will be more comprehensive and an income tax return will be required.
- consider developing a beneficiary schedule – the needs of beneficiaries should be considered at trustee meetings.
- ensure that documents relating to the Trust are properly managed. One master file should contain all documentation and correspondence. Each trustee should also retain copies of the Trust deed and the minutes of meetings and trustee resolution
- check that any physical assets of the Trust are being maintained, and if not, how these will be managed going forward.
- check that the assets of the Trust are covered by insurance. Trustees have a duty to protect the assets they control.
Perhaps most importantly, following the meeting the Minutes should be written up and signed by all trustees. These Minutes will detail any decisions made and record the trustees’ agreement to these.