Trust Documentation 

Grange Associates Ltd - 3 July 2012

Unlike the regulatory regime for companies, there are no minimum statutory requirements for resolutions, minutes and record-keeping for trusts, which can make it easy to forget all about them.  However, trust record-keeping is still an essential function of good trust management.

We believe good practice, at a minimum would be:

Preparing a basic set of annual financial statements

Even if the trust has no taxable income, it is important to keep a record of assets the trust owns, amounts it owes and is owed and movements in any of these balances via gifting.

Having an independent trustee

While it may seem simpler for a husband and wife to act as the only trustees in their family trust, having an independent trustee is important to help ensure that decisions are made based on the best interests of the beneficiaries.

Preparing annual trustees’ resolutions

These resolutions will serve to approve the annual financial statements as well as note any gifts the trust may have received, and state the balances still owing by the trust to the donor.  It should also detail and approve all taxable and non-taxable distributions made to beneficiaries throughout the year.

Preparing trustees’ resolutions for major trust transactions

What is considered “major” will differ for every trust.  You might wish to set a monetary threshold which is appropriate to your circumstances,  over which a resolution will be prepared for approval.  Transactions could include sale and purchase of property, investments, loans, debt acknowledgements, distributions etc.  The reasoning behind decisions can also be documented, where appropriate, if it is felt the decision may be questioned in future.

Preparing a Deed of Gift for any gifts received by the trust

Although gift duty has been abolished, and with it the need to file gift statements with the IRD, it is still important to document any gifts received, including the date, amount and reason for the gift, as well as recording the balance still owed by the trust to the donor.

Keeping a minute book

This will usually be held by your accountant or solicitor.  It should contain the trust deed, all resolutions, deeds of gift, copies of annual accounts and any other important trust documentation such as loan agreements.

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All information is correct at the date of article publication. Please note we provide the information as a service only. Accordingly, the contents are not intended as a substitute for specific professional advice and should not be relied upon for that purpose.   

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