Funeral Plan Trusts and Trustees
Below we have summarised the basic workings of a Prepaid Funeral Plan Trust.
Trusts are governed by the trust document.
This is a legal document prepared by a solicitor in discussion with the funeral director.
Unless law dictates otherwise, the trustees must adhere to its terms.
All trustees must be aware of what’s required by the trust document
The trust must be set up with the majority of trustees being unconnected with the plan provider (i.e. funeral director).
The Trust People can act as the sole trustee of the trust. This is the cheapest option.
Or if you want a connected trustee (or yourself as a trustee) then there must be at least two unconnected trustees.
The trustees must be “fit and proper” persons. At The Trust People all our key members are professionally qualified and, as such, subject to their industry body “fit and proper” tests.
Trustee’s main roles
- To ensure the trust is well governed, in accordance with the trust deed, the law, and recommended good practice.
- To safeguard and invest trust funds to try to achieve, at a minimum, the growth assumed by the actuary to cover the estimated cost and timing of funerals.
- To make sure that money is paid in and out of the trust accurately and on time.
- We will help ensure everything is in place from day 1 and the trust has the support of an experienced, professional team including bankers, accountants, auditors, investment managers, actuary and solicitor.
- Your main focus can then remain on the successful running of your business.
- The Trust People are a corporate trustee which means you benefit from a team of professional people ensuring continuity of service at all times. You will also benefit from having a main contact.
- Legal Requirements of Trustee
There are various rules and guidance that we follow to ensure we act honestly, ethically and with the necessary due care and attention:
- The activities of funeral plan providers are regulated under The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO):
www.legislation.gov.uk/uksi/2001/544/contents/made - We also follow the Funeral Planning Authority’s Rules and Code of Practice (The FPA are a voluntary trade body):
https://funeralplanningauthority.co.uk/regulations/code-of-practice/ - We also operate on the basis of the Actuarial Profession’s Guide for Trustees:
www.actuaries.org.uk/documents/guide-trustees-trust-based-pre-paid-funeral-plans - Our team, who are also members of a professional body, will also follow their professional body’s guidance. For example, Chartered Accountants follow:
www.icaew.com/membership/regulations-standards-and-guidance/practice-management/acting-as-a-trustee - Other key regulations exist in respect of Money Laundering and Data Protection.
The trustees will have obligations under the anti-money laundering legislation and may be required to make reports without the plan holders knowledge.
Money Laundering
Data Protection
The Plan and potentially the trust as a separate entity, will be subject to the new Data Protection rules (GDPR). The Data Controller will need to ensure compliance when providing personal data to the plan administrators, actuary, auditor and trustees.
We will continue to monitor any new regulation or guidance in relation to Trusts and prepaid funeral plans. The Government are currently running a consultation about potential regulation by the Financial Conduct Authority (FCA):
Investments
The funds of the trust have to be invested within set timescales with an approved fund manager.
The aim of the trust is to provide sufficient growth to cover the cost of the future funerals. As with all investments performance cannot be guaranteed and investments can go down in value as well as up. For this reason the investment of the trust funds is a long term commitment.
The investment strategy will be set following discussion with the plan holder, actuary and investment manager. The trustees will provide a written statement of investment principles (SIP) and will monitor the investment manager’s compliance with it. The SIP will be reviewed at least annually to take into account performance, actuarial assumptions and market conditions.
Liquidity will also be set to provide for expected withdrawals required from the fund.
There may be instances where the current investment value is not projected to be sufficient to provide for the estimated future funeral costs. In these instances, top up payments may be required from the plan provider to make good the projected shortfall.
The Trust people are fully compliant with FCA (Financial Conduct Authority) Regulation and GDRP Data Collection & Protection act 2018
The Trust People Limited, Bollin House, Bollin Link, Wilmslow, Cheshire, SK9 1DP
trustpeople.co.uk is a trading name of The Trust People Ltd. | Company Number 11464050. Data Protection Number ZA467190.