The Gazette 1974

TRUST RECORDS BY SOLICITORS By J. DUNCAN MORRISON, Solicitor, Member of the Stock Exchange Reprinted by kind permission of the Law Society 'Gazette'

Whenever a Trust is created, or comes into force under a Will, a duty falls upon the Trustees not only to keep accounts, but to ensure proper, effective and continuous attention to the Trust's affairs. This very wide duty is frequently delegated to the solicitors and other professuonal advisers involved. The management of substantial funds is usually well carried out, but difficulties arise in the case of medium or small Trusts. Yet it is just these where the need for management is greatest. Also, the failure to manage can have the greatest personal consequences upon the beneficiaries where the amounts involved are relatively small. The first step in management is proper records and a means of ensuring that no Trust is ever overlooked. The object of this article is to present some ideas for a single system to maintain office and individual Trust records. It is not concerned with Trust accounts. The aim is to keep the minimum records necessary to achieve three principal objectives : (i) That all Trusts are centrally recorded in the office, iii) That all Trusts' records are maintained on a similar basis, so that they can be interchanged between personnel and the position quickly seen. ! iii ) That each Trust is adequately reviewed and kept under observation. It is believed that these objectives can be achieved by three simple basic records : (a) A Central Trust Record Book. (b) An individual Trust Record Folder for eacli Trust; and ( c ) A Review Diary. In the first place some work in setting up the system for existing Trusts, and at the commencement of each new Trust, is absolutely essential, but it can be kept to a minimum. It will he repaid by a very substantial reduction of work (and a better service) for the dura- tion of each Trust. The Central Trust Record Book should be main- tained by a legal executive in the office who has some trust work experience, and is himself running some of the Trust matters to be recorded. The Record Book will cross-refer to the Trustees, so that if anything comes into the office in the name of the first-named Trustee "and Another" it can be traced by the Trust Legal Executive (TLE). The Trust Record Book should be an A4 size loose- leaf strongly bound book and be maintained by and kept in the room of the TLE. It will be divided with cardboard dividers into Four Sections showing: (a) Tirrts in alphabetical order. As each Partner and Legal Executive brings his Trusts into the system, a copy of the first page of the Trust Record Folder (see below) will be sent to the TLE for insertion in the Record Book. (For those who dislike loose-leaf records the Trust Record Book could be bound and the details entered from this copy, but both extra work and risk of error arise.) When any material change occurs a replacement "first page" is prepared and a copy should reach the Record Book. (b) Office Personnel in either alphabetical or

seniority order. This js simply sheets each headed with the name of any person in the office handling Trust matters with a list of the Trusts currently in his charge. (c) List of Trustees in alphabetical order and with a note of each Trust they are concerned in and the entry "(1)" for the first-named Trustee. This section has two main values, first for "tracing" purposes and secondly on the death or retirement of anyone involved in a number of Trusts. (d) Date List of redeemable and convertible securi- ties etc. In some instances this will be maintained by the Brokers concerned, and is very much "an op- tional extra". In most cases it will be sufficient to have one page headed with the year of each of the next five years and thereafter five year pages. A list of equity holdings is not included. To this extent the "tracing" element of the Record Book and the system breaks down, but to incorporate this would, in the author's view involve unnecessary work and therefore put the maintenance of the whole system at risk. The Trust Record Folder can take the form of a cardboard loose-leaf type folder, or an envelope type folder, and in either case A4 is suggested. Provided it contains the "first page" which is the basic information, its exact contents are very much a matter for the partner or legal executive in charge of the Trust. It should on its own, and with no or only minimal reference to the "file", contain a precise picture of the purpose and current state of the Trust and be clear to any other partner or legal executive (and especially the TLE) who has occasion to refer to it. The most important item, the "first page", is a short record of the details of the Trust and reference is made to the example at the end of this article. It will contain the following information and will be prepared in duplicate at least, one copy going to the TLE : (1) Name of the Trust. (2) Names and addresses of the Trustees. (3) Whether created by Settlement or Will and its date or date of death. A copy of the document or of the relevant clauses should also go into the Trust Folder. (4) If there is a Tenant for Life or other recipient of income, name, address and age. Short details of residuary interests should also appear. (5) Names of brokers, estate agents or others con- cerned according to the nature of the Trust. (6) Names of bankers (and any divident mandate instructions or account numbers). (7) Name of any accountants or other specialists involved. (8) Short particulars of type of Trust assets, e.g. "mainly property", "mainly Stock Exchange securities", and on the back or attached any information to be recorded in the Date List section (if maintained) of the Trust Record Book. (9) Details of investment powers, etc. (10) Date of preparation and dispatch to TLE and of Review Dates—see below. It is strongly recommended that this "first page", when settled to the requirements of an individual office, be printed or at least duplicated. 277