Trustee Duties and Powers UK: What the Trustee Act 2000 Requires

Updated: 16 May 2026 • Reading time: 8 min

Being appointed as a trustee — whether under a will, a family trust, or a life interest arrangement — is a serious legal responsibility. The Trustee Act 2000fundamentally reformed trustees’ powers and duties in England and Wales, imposing a statutory duty of care and expanding investment powers. Understanding what the law requires is essential for anyone accepting a trusteeship.

The Statutory Duty of Care

Section 1 of the Trustee Act 2000 introduces the statutory duty of care, which applies when trustees exercise their statutory powers of investment, delegation, and acquiring land. The duty requires trustees to exercise such care and skill as is reasonable in the circumstances, having regard to:

• Any special knowledge or experience the trustee has or holds themselves out as having
• If acting in the course of a business or profession, any special knowledge or experience that it is reasonable to expect of a person acting in such capacity

A lay trustee is therefore held to the standard of a reasonably prudent person of business. A solicitor, accountant, or financial adviser acting as trustee is held to the higher professional standard. The duty can be excluded or restricted by the trust instrument, but not in a way that would allow deliberate dishonesty.

Investment Powers and Duties

The Trustee Act 2000 replaced the old restrictive “trustee investments” regime with a broad general power of investment (section 3). Trustees can now invest in any type of investment — equities, bonds, property, cash — as if they were the absolute owner, subject to any restrictions in the trust instrument.

Standard Investment Criteria

When exercising the power of investment, trustees must have regard to the standard investment criteria (section 4):

• Suitability — is the investment suitable to the trust, having regard to the trust’s purpose and the beneficiaries’ interests?
• Diversification — is the portfolio sufficiently diversified, so far as appropriate to the circumstances of the trust?

Trustees must also review investments from time to time and consider whether, in the light of the standard investment criteria, they should be varied.

Duty to Obtain Advice

Before exercising the power of investment and when reviewing investments, trustees must obtain and consider proper advice about the way in which the power should be exercised (section 5) — unless they reasonably conclude that in the circumstances it is unnecessary or inappropriate to do so (for example, a very small trust or where the trustee is themselves a qualified investment adviser).

Power to Acquire Land

Section 8 gives trustees the power to acquire freehold or leasehold land in the UK as an investment, for occupation by a beneficiary, or for any other reason. This replaces the more restrictive position under the old law and is subject to the statutory duty of care when exercised.

Delegation to Agents

Prior to the Trustee Act 2000, trustees could only delegate to an agent in very limited circumstances. Sections 11–23 now allow trustees to delegate any or all of their asset management functions to an agent (such as a discretionary fund manager). The trustees must:

1. Enter into a written agreement (the “agency agreement”) before or when appointing the agent
2. Include in the agreement a policy statement restricting how the agent exercises the delegated functions, consistent with the trust’s investment criteria
3. Periodically review the arrangement and, if necessary, intervene (section 22)

Trustees remain liable for the agent’s acts unless they took all reasonable steps to ensure the terms of the policy statement were complied with. Delegation of purely administrative functions (paying bills, renewing leases) is also permitted on broader terms.

Duty to Account and Keep Records

Trustees must keep clear accounts of all trust receipts and payments and make them available to beneficiaries on reasonable request. The duty extends to allowing beneficiaries with a vested interest to inspect trust documents — including the trust deed itself, investment schedules, and correspondence relating to administration.

Letters of wishes — where a settlor expresses wishes to the trustees without making them binding — occupy a more nuanced position. Trustees can, in appropriate cases, decline to disclose them; the court will consider whether the public interest in transparency outweighs the need for confidentiality.

Trustee Personal Liability

A trustee who commits a breach of trust is personally liable to compensate the trust for any loss that results. Liability is joint and several — each trustee is liable for the full amount, regardless of which trustee caused the breach. Common breaches include:

• Investing in unauthorised or unsuitable investments
• Failing to diversify the portfolio
• Distributing to the wrong beneficiary
• Failing to exercise proper supervision of a delegated agent
• Mixing trust funds with personal funds

Trustees can apply to court under section 61 of the Trustee Act 1925 for relief from liability if they acted honestly and reasonably, and ought fairly to be excused. Taking out trustee indemnity insurance is widely recommended and is usually an expense payable from the trust fund.

Frequently Asked Questions