Annual Family Trust Review Checklist

A family trust is not a document that is signed once and then forgotten. Families change, assets move, and the people who hold roles in the structure grow older or step aside. A family trust annual review checklist gives you a fixed moment each year to compare what the trust deed says with what is actually happening.

This page is a working tool for the settlor, the family and the trustee. It follows the order in which a meeting with the trustee usually runs: people first, then wishes, assets, roles, records and tax. If you are new to the subject, start with what a trust is and the family trust structure.

Why review a family trust every year

A trust deed fixes rules; it does not watch over itself. Under the Trusts Act explained, the trustee carries the day-to-day duties, but the family is best placed to notice life events: a birth, a marriage, a divorce, a death, a move abroad or the sale of a business.

A yearly review does three things:

• it catches changes before they become disputes;
• it gives the trustee the information needed to act properly;
• it produces a short written record you can look back on.

A review is not a conversation about changing the trust. Most years, nothing needs to change. The point is to confirm that.

How the yearly review runs

The annual review checklist

Print this list or copy it into your own notes. Each block is explained in the sections below.

People: beneficiaries and family facts

• Confirm that the list of beneficiaries, or the class of beneficiaries, still matches the family
• Note any births, adoptions, marriages, divorces or deaths since the last review
• Check whether any beneficiary has moved to another country
• Confirm current names and last known addresses with the trustee
• Ask whether any beneficiary has become vulnerable, insolvent or otherwise unable to manage money

Wishes: the deed and the letter of wishes

• Re-read the trust deed and check that its purposes still reflect the family's aims
• Re-read the letter of wishes and update it if circumstances have changed
• Check that the letter of wishes is stored where the trustee can find it
• Confirm that any reserved powers are still being used as the deed allows

Assets: what the trust holds

• Obtain an up-to-date list of assets from the trustee
• Compare it with the list from the previous year and ask about every difference
• Confirm that new assets were properly transferred to the trustee
• Check that property, shares, accounts and other holdings are recorded in the trustee's name
• Review the investment approach and ask who took each major decision

Roles: who does what

• Confirm who the current trustees are and that at least one is a qualified trustee
• Check whether a protector is in office and whether the protector's powers are still suitable
• Confirm who holds any other role, such as enforcer in a purpose trust
• Decide whether any role holder should be replaced or whether a successor should be named
• Ask the trustee to confirm that no conflict of interest has arisen

Records and transparency

• Ask the trustee to confirm that accounts and documents are up to date
• Confirm that the register of beneficiaries and settlors is current
• Check that identity details of everyone with control over the trust are up to date
• Confirm that the deed and any amendments are held together in the trust file

Tax and distributions

• List the distributions made during the year and to whom
• Ask the trustee how the trust and each beneficiary are treated for tax
• Check whether any beneficiary has changed tax residence
• Note any filing the trustee has made or still has to make

People: beneficiaries and family facts

The first check is the simplest: are the right people still named? Under the Trusts Act 2001, a trustee must keep an alphabetical register of the names and last known addresses of each beneficiary and settlor. That duty extends to a non-resident foreign trust that the trustee administers. The register is only as good as the information it receives, so tell the trustee about family changes as they happen, not once a year.

Pay attention to the way beneficiaries are described. A deed that names "my children" behaves differently from one that names each child, and a class of beneficiaries can change in size over time. If you are unsure of your position as a beneficiary, see how to find out if you are a trust beneficiary.

A change in family circumstances can also raise questions outside the trust itself. The effect of a divorce on trust assets, for example, depends on the facts and on the deed; see protecting trust assets from divorce and discuss the point with an adviser.

Wishes: the deed and the letter of wishes

The deed binds the trustee. A letter of wishes does not, but it tells the trustee how the settlor would like discretion to be exercised. In a discretionary trust, where the trustee decides who receives what and when, the letter is often the most useful guide the trustee has.

Each year, read it again with fresh eyes. Ask:

• Does it still describe the children or grandchildren accurately?
• Does it say how to treat a beneficiary who needs help, or one who should wait?
• Does it mention assets that the trust no longer holds?
• Is it dated, signed and easy to find?

Remember that a trust is presumed to be irrevocable by the settlor unless the deed expressly provides otherwise, under section 11 of the Trusts Act 2001. A change of heart is therefore not something the settlor can simply act on. Where the deed allows an amendment, it should go through the trustee and be recorded. For more on this, see changing the terms of an existing trust.

Assets: what the trust actually holds

Many reviews go wrong because the family and the trustee are looking at different lists. Ask the trustee for the current schedule of trust property and match it against your own understanding.

Three questions are worth asking each year:

1. Has anything been added? If so, was it formally transferred to the trustee, and is the deed wide enough to cover it?
2. Has anything been sold or distributed? Is there a written decision and a record of where the proceeds went?
3. Is any asset used personally by a family member? If so, on what terms?

The last point matters. A trust whose assets are treated by the family as personal property can raise questions about whether it is genuine; see sham trusts.

Roles: trustee, protector and others

The trustee

The Trusts Act 2001 limits a trust to a maximum of four trustees, and at least one must be a qualified trustee at all times. A qualified trustee is a FSC-licensed corporate service provider (Management Licence), or another person resident in Mauritius whom the FSC has authorised to provide trustee services. A review is the moment to confirm that the current line-up still fits those rules. The trust does not become invalid solely because a trustee or a qualified trustee is missing, but a gap should be fixed rather than left. For the practical side, see the duties of a trustee toward the family.

The protector

Section 24 of the Trusts Act 2001 allows the deed to appoint a protector, an adult (including the settlor) or a legal person, to advise the trustee. Unless the deed says otherwise, a protector may remove and appoint trustees, change the governing law, move the place of administration and withhold consent to certain acts, without becoming a trustee. Ask each year whether the protector is still active, still suitable and still independent enough. Details are in trust protector in Mauritius.

The settlor

Under section 8, the settlor may also be a trustee, a beneficiary, a protector or an enforcer, but may not be the sole beneficiary of the trust. If the settlor holds several roles, the review should confirm that those combinations remain within the deed and within the law. See how much control a settlor can keep.

The enforcer

The same person cannot be both trustee and enforcer of one trust. The enforcer is entitled to the annual accounts, to a copy of the deed and to the legal advice received by the trustees. Where a trust has an enforcer, check that someone is named and that a successor is provided for.

Records and transparency

Good records are the trustee's responsibility, but the family benefits from checking them. Under section 38(3) of the Trusts Act 2001, the trustee must keep accounts and documents up to date, and accounting records must be kept for at least 5 years after the operations concerned are completed.

Beyond the trust itself, Mauritian law places transparency duties on licence holders and trustees:

• Section 26A of the Financial Services Act 2007 requires the FSC to keep a register of domestic trusts, and of foreign trusts that have at least one qualified trustee. It includes the trust's name and characteristics, the deed and its amendments, and the identity and addresses of the beneficiaries, trustees, settlors, protectors and enforcers, together with its purpose, governing law, place of administration and service providers.
• Section 29 of the same Act requires each licence holder to keep a register of the beneficial owners of its clients at all times, and each qualified trustee to keep a register of every trust it administers, available to the FSC on request. These duties cover existing as well as new clients and trusts.
• Under FIAMLA 2002, the beneficial owner of a trust-like arrangement includes the settlor, the trustee, any protector, each beneficiary (or the class of beneficiaries and objects of a power) and any other individual who ultimately exercises effective control, including through a chain of control.

In practice, this means the trustee will ask you for identity and address details. Answer promptly: a trustee that cannot update its records cannot properly act. For a view of what is and is not public, read is there a register of trusts in Mauritius?. Confidentiality is protected as well: under section 33, the trustee keeps trust information confidential, and a court orders disclosure only on the application of an investigating authority where the information is required in good faith for an investigation or proceedings concerning a financial crime.

Tax and distributions

A tax review is not the same as a company filing check, and this checklist does not cover the latter. It is about the trust and its beneficiaries. The tax position depends on residence, on the type of income and on the deed, so each point below is a question for the trustee or a tax adviser, not a conclusion.

• Under section 46(4) of the Income Tax Act, any distribution to a beneficiary of a trust is deemed to be a dividend in the beneficiary's hands.
• Section 46(2) still describes a trust whose settlor is non-resident (or holds a Global Business Licence) and whose beneficiaries are all non-resident (or hold a Global Business Licence), but such a trust remains taxed at the same Part IV rate of 15%.

Ask the trustee how each distribution made during the year was treated, and keep the answer with your review notes. For a fuller view, see how trusts are taxed in Mauritius and tax on distributions to beneficiaries.

A quick view of how your trust compares to the rules

When a review shows something needs to change

Sometimes the checklist uncovers a real problem: a missing role holder, an outdated beneficiary description, an asset that was never transferred. Do not fix it informally. Write it down, ask the trustee how the deed deals with it and take advice before any step that alters the trust. Larger questions, such as a trust that has served its purpose, are covered in how a trust ends. The maximum life of a non-purpose trust is 99 years from creation, unless it ends earlier, so most families will reach the end of a trust by choice or by purpose long before that limit.

General information of this kind cannot replace advice on your situation. If you want an assessment, you can send a request through the contact form and have it relayed to an FSC-licensed corporate service provider (Management Licence).