Trust Administration, Accounting and Record Keeping
Administration is where most practical exam questions sit. A trustee must keep accurate records of trust property, receipts and payments, and must be able to account to beneficiaries. Under the Trusts Act 2019, trustees must keep core documents (the deed, variations, records of trust property, and records of decisions) and, for certain trusts, provide information to beneficiaries on request. Trap: assuming all trusts are exempt from disclosure - some categories (such as trusts created by will, or certain family trusts) may be excluded, and the trustee must know which.
Separation of trust property from the trustee's own property is fundamental. Trust bank accounts should be in the trust's name, and distributions must be properly authorised by the deed and documented by resolution. Distributions to beneficiaries must be recorded, and the trustee must consider tax consequences (for example, the trustee's tax rate and beneficiary income rules).
Accounting should show capital and income separately, since many deeds require income to be distributed to one class and capital to another. Trustees should prepare annual accounts, reconcile the trust bank account, and retain records for the statutory retention period.
Rule of thumb: if you cannot trace a transaction from the deed authority, through a trustee resolution, to a bank record and an entry in the accounts, the administration is deficient. Every distribution should have all four links.