A Trustee must keep accurate records detailing the assets held in Trust, including any changes in assets, any distributions to beneficiaries and any income received from the assets. There is no prescribed format which a Trustee should follow, however, they must be in the position to produce the accounts whenever requested by the beneficiaries and at the very least; annually.
It is sensible for the Trust Accounts to be made up until 5th April each year in line with the Tax Year, as this will assist with the preparation of the Trust Tax Return.
What should be included in the Trust Accounts?
The Synopsis - What are the principal terms of the Trust? Who are the beneficiaries? Who are the Trustees? Who are the Advisers? What is included in the Statement of Investment Principals? When did the Trust Commence? Are there any other key dates, such as 10 year anniversary, date of vesting, perpetuity period?
The Balance Sheet - What is the Balance on the Capital Account for this year and last year? How is this figure made up, i.e. what are the assets of the Trust? What is the balance after creditors, expenses and taxation?
Schedule of Investments - A list of the investments at the market value showing the changes in value during the past year and any income received.
Capital Account - What is the value of the assets? Have there been any gains or losses realised during the period? Are there any taxes or administrative expenses which need to be deducted? Have any distributions or appointments from capital been made?
Income Account - What income has been received? Where has the income come from? Are there any expenses to be deducted from the income? Was any income paid to a beneficiary?
Should the Trust Accounts be audited?
There is no legal requirement for the Accounts to be audited, though this may well be a requirement of the Trust Deed. Once every three years, Trustees are entitled to have a periodic audit carried out under s.22(4) Trustee Act 1925, the cost of which is deducted from the Trust Fund.
Do the Accounts need to be approved?
The trustees should approve the accounts by signing and formally agreeing to adopt them. In certain circumstances, the Trust Accounts should be issued to the Beneficiaries for their approval.
If you would like any additional information on producing Trust Accounts, then please contact us.