ACCA Advanced Taxation (ATX) Practice Exam

What is required for a trust in terms of trustees?

1. A trust must have at least two trustees

2. A trust can have only one trustee

3. A trust must have three or more trustees

4. A trust should not have any trustees

The correct answer is: A trust must have at least two trustees

The requirement for a trust regarding trustees depends on the jurisdiction and specific laws governing trusts, but a trust can indeed have just one trustee. However, having at least two trustees is often recommended or required for certain types of trusts to ensure there is a check and balance system in place, reducing the potential for misuse of power by a single trustee. Having multiple trustees can provide protection for the beneficiaries, as it ensures that decisions are made collectively and can minimize risks associated with individual decision-making. This encourages accountability and transparency within the trust administration process. It’s also a common practice in certain legal frameworks that stipulate that complex trusts—like those managing significant assets or those that require diverse management expertise—should have more than one trustee to handle these responsibilities effectively. This structure can help with the continuity and effectiveness of trust management, particularly in situations where decisions need to be made collaboratively. In summary, while having at least one trustee is mandatory, requiring two or more is often seen as a practical measure to ensure proper oversight of the trust's operations and to help safeguard the interests of the beneficiaries.