Trust Management Agreement Template for England and Wales

A Trust Management Agreement is a crucial legal document that allows trustees to formally delegate the day-to-day management of trust assets to professional investment managers while retaining ultimate responsibility for the trust. Under England and Wales law, this arrangement enables trustees to access specialist expertise while ensuring compliance with their fiduciary duties and statutory obligations.

When do you need this document?

You need a Trust Management Agreement when trustees lack the time, expertise, or resources to effectively manage complex trust portfolios themselves. This is particularly common with substantial family trusts, charitable foundations, and pension schemes where professional investment management is essential. The agreement is also necessary when trustees want to access specialist investment strategies, international markets, or alternative investments that require professional oversight. Additionally, it's required when trust deeds specifically mandate professional management or when beneficiaries expect institutional-grade investment performance.

Key legal considerations

The agreement must clearly define the scope of delegated authority while ensuring trustees retain sufficient control to meet their fiduciary obligations. Investment restrictions and parameters must be explicitly stated, including asset allocation limits, prohibited investments, and risk tolerance levels. Fee structures require careful consideration, covering management fees, performance fees, and expense allocation between parties. The document must establish comprehensive reporting requirements, including regular performance updates, risk assessments, and compliance confirmations. Termination provisions should protect all parties, specifying notice periods, asset transfer procedures, and final settlement arrangements. Insurance and indemnity clauses are essential to allocate liability appropriately between trustees and managers.

Legal requirements in England and Wales

Under the Trustee Act 2000, trustees must exercise reasonable care and skill when selecting and monitoring investment managers, following the statutory duty of care standard. The Financial Services and Markets Act 2000 requires that investment managers hold appropriate regulatory authorization from the Financial Conduct Authority. For pension trusts, additional compliance with the Pensions Act 1995 and 2004 is mandatory, including specific governance requirements and member protection measures. Charitable trusts must comply with the Charities Act 2011, ensuring investment strategies align with charitable objectives and regulatory guidance. Money Laundering Regulations 2017 impose due diligence and reporting obligations on all parties. The agreement must include provisions for regular review of the manager's performance and authority, with mechanisms for intervention if trustees' duties are compromised.