The statutory duty of care In order to ensure that trustees exercise the wider powers given to them in a responsible manner, a statutory duty of care was created under the Act. The duty states that a trustee must always exercise such care and skill as is reasonable in the circumstances. In particular, a trustee who has special knowledge or experience is expected to use it in their capacity as trustee. A higher standard of care will therefore be required from a professional trustee. It is, however, possible for the duty of care to be excluded or modified by the trust instrument. Whilst this statutory duty replaces any common law duty of care that may have previously applied, trustees remain subject to the existing fundamental duties, such as acting in the best interests of all beneficiaries, avoiding any conflict of interest and complying with the terms of the trust. The ‘standard investment criteria’ Trustees must not only make sure that any investment is suitable for the trust but also consider, where appropriate, the need for diversification of investments. The suitability of different types of investments as trust assets will be gauged by numerous factors. As well as their individual qualities in providing growth and income for a trust, tax efficiency and low-cost administration are important issues, as both can enhance returns to beneficiaries. Investment bonds and collective investments can often provide a suitable way to invest indirectly in stocks and shares, although other assets may offer suitable alternatives. In selecting suitable investments, the trustees will also be required to consider the beneficiaries’ position in respect of those that can benefit today (such as those with an interest in possession) versus those that may benefit in the future. The size of the trust fund will be relevant as far as diversification is concerned. Additionally, trustees are obliged to review the trust portfolio from time to time and consider whether the investments still satisfy the standard investment criteria, and therefore whether they should be altered in any way. The duty to obtain ‘proper advice’ Before making or changing an investment, trustees have a duty to obtain and consider proper advice from somebody who they reasonably believe to be qualified and competent to give such advice on investment matters. The only exception to this requirement is where the trustees are certain that it is unnecessary (e.g., the trustees possess the necessary skills and knowledge) or uneconomical (e.g., the amount to be invested is very small) to take advice. In most instances, trustees will need to take advice, especially where there is no existing experience or knowledge in these areas. Quilter 7 The trustees can delegate certain decision-making functions that do not relate to the distribution of trust assets or the appointment/dismissal of trustees.