There have been a couple of inconclusive historic email chains on this topic over the years. My research on HMRC TRSM5000 etc expresses a retention period of 5 years for general records and 12 years for taxation records in case of HMRC enquiry. The Law Society suggests that ‘papers’ (providing a helpful listing) should be retained for 6 years post the trust period ending - and accords with HMRC as regards taxation papers.
I have found nothing on tis topic in trust administraion books - perhaps too mundane a topic! But having recently joined a newly created trust company I find that colleagues from a legal background and those from the bank trust companies have differing views. Interested lo learn if there is a best practice solution out there!
To some extent, I suggest the answer is dependent upon whether the trust has come to an end, or new trustees have taken it over.
If the former, should the beneficiaries believe they have a cause of action against the trustees the limitation period is likely to be 6 years, unless there has been deliberate concealment of the right of action (by the last trustees or any former trustee). A retention period of 7 years – the 6 years plus time for the service of proceedings – might be appropriate.
If new trustees have taken over, then can the former trustees safely dispose of any papers whilst the trust continues, other than by handing them all over to the new trustees (and obtaining a receipt which is kept for at least 6 years after the trust is terminated and distributed).
It will inevitably be a matter of balance between the cost of retention and the risk of a claim.
However, mindful that many professional trustees are likely to keep trust documents and papers in virtual form, rather than physical paper, the cost of retention may be a lot lower, and the ability to access historic files significantly easier. This might therefore swing the balance towards a longer period of retention, especially following a trustee’s retirement.
I suggest that “best practice” may be to retain all records for 7 years after the end of the trust period, but for many (if not all) that would be viewed as unrealistic.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals