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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.
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