The extent of a trustee’s responsibilities depends on the type of trust it is. For example, in a ‘discretionary trust’, a trustee is responsible for deciding when to make payments to beneficiaries as well as declaring and accounting for tax on trust investments. In a ‘bare trust’, the trustee may have few duties to perform. Providing they are old enough, the beneficiaries will decide how to use trust capital and income and are responsible for declaring and paying any tax due.
The person who set up the trust – the settlor – may have given instructions that trustees carry out various functions. These may be contained within the ‘trust deed’, which outlines the terms of the trust. Trustees are legally bound to act on these instructions.