{"id":173381,"date":"2022-08-03T07:49:29","date_gmt":"2022-08-03T06:49:29","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=173381"},"modified":"2025-07-02T00:41:01","modified_gmt":"2025-07-01T23:41:01","slug":"breaching-trustee-duties","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/corporations\/breaching-trustee-duties\/","title":{"rendered":"Consequences of Breaching Duties as a Commercial Trustee in England"},"content":{"rendered":"

If you serve as a trustee in a commercial capacity, you have certain duties which you must obey. This article will briefly outline your duties as a commercial trustee and consider the consequences of breaching these duties.\u00a0<\/span><\/p>\n

Trustee Duties<\/span><\/h2>\n

All trustees, regardless of whether they are commercial trustees, owe <\/span>several responsibilities<\/span><\/a> to the trust and its beneficiaries. If you breach these duties, depending on the nature of the breach and its effect, you can face consequences as a trustee.<\/span><\/p>\n

We outline the core duties of trustees below.<\/span><\/p>\n

Duty of Care\u00a0<\/span><\/h3>\n

There is a general duty of care to act with <\/span>utmost good faith<\/span><\/a> in all dealings with and on behalf of the trust. In effect, the law requires you to make decisions for the trust with the same level of prudence and intent that you would exercise if you were making a commercial decision on your own behalf.\u00a0<\/span><\/p>\n

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Additionally, the law may hold you to a higher standard if you possess any special skills or expertise, such as a professional financial adviser or accountant.<\/span><\/p>\n<\/div>\n

Complying with the Trust Instrument\u00a0<\/span><\/h3>\n

The trust instrument is a document setting out the terms of the trusts and specifying how the trustees should manage the trust property.\u00a0<\/span><\/p>\n

As a trustee, you must always comply with the trust instrument. For instance, if there is a term that states you cannot invest the trust money in tobacco companies or weapons manufacturers, you must comply with this term.\u00a0<\/span><\/p>\n

Managing and Investing the Trust Assets\u00a0<\/span><\/h3>\n

The point of all trusts is for the trust property to grow. Sometimes, the trust instrument may not explicitly mention a responsibility to invest. Nevertheless, the law imposes a <\/span>requirement on trustees to invest<\/span><\/a> the trust property in suitable investments, depending on the beneficiaries’ entitlement to the trust property. Therefore, if you simply let the trust property sit in a bank account that pays a minimal interest amount, this would likely be a breach of your duties as a trustee.\u00a0<\/span><\/p>\n

Acting with the Beneficiaries\u2019 Interest in Mind\u00a0<\/span><\/h3>\n

Additionally, you must keep the beneficiaries in mind when acting for the trust. For instance, if you know one of the beneficiaries will be entitled to their share of the trust property in a year, but you invest all of the trust property in speculative shares, you would be breaching this duty.\u00a0<\/span><\/p>\n

Acting Impartially\u00a0<\/span><\/h3>\n

You cannot show any favouritism or preference between the beneficiaries. Subject to the terms of the trust, you must treat them all the same.<\/span><\/p>\n

Avoiding Conflicts of Interest\u00a0<\/span><\/h3>\n

Another duty is to avoid your <\/span>personal interests conflicting with the interests of the trust. It does not matter if your intentions are pure. The law is strict about this duty.\u00a0<\/span><\/p>\n

Examples of conflicts of interest include:<\/span><\/p>\n