Trusteeship

The appointment of a suitable trustee is a very important decision the settlor (person creating the trust) has to make.  The role of trustee is onerous and the fiduciary duties a trustee has to adhere to means that the trustee must be proactive and fully understand what is expected of them.  It is a role that should not be underestimated.

The settlor can appoint a professional trustee or a lay trustee (often a close member of the family).  They can also appoint a professional trustee to act in conjunction with a family member.

As a minimum, a suitable trustee would be expected to:

•  Fully understand the terms of the trust;
•  deal with the on-going tax compliance and legal regulations;
•  bookkeeping and keeping sufficient accounting records relating to all capital and income;
•  keep in contact with the beneficiaries and consider their ever-changing circumstances; and
• appoint, review and monitor the investment managers.

These onerous tasks are reasons that the appointment of a professional trustee is preferable.

Why Choose a Professional Trustee

The Settlor should contrast what a professional trustee can offer compared to the appointment of a lay trustee.

A professional trustee can provide continuity, stability, professionalism and investment proficiency. Selecting a professional demands a higher duty of care when dealing with trust funds and this can also prove useful ensuring the settlor’s wishes are completely upheld.  A professional can provide a high level of technical tax and trust law expertise with practical experience of handling sensitive issues from time to time.

Selecting a professional can help to avoid the biases that may occur when you select a family member as well as ensuring complete objectivity and avoiding conflicts of interest.

The lay trustee will generally be someone who knows the family intimately.  It is also not uncommon for the settlor to be a trustee during their lifetime.  This allows them to retain a degree of control allowing them to ensure the trust meets the objectives it was created to meet.

Key considerations:

Lay trustees may not charge which obviously is an advantage however, it is unlikely that they will have the knowledge of the professional.  In addition, they may not have an awareness of their fiduciary responsibilities to ensure that the trust is properly run and potentially opening the trust up to risks.

Also, can a lay trustee sufficiently distance their role as trustee from their relationship with the beneficiary?  Could they come under pressure to release trust monies and can they really make clear objective decisions without personal opinions or emotions coming into play?

Whether a professional trustee is appointed or not, every trustee must be fully aware of the duties the role of trusteeship brings.

Professional Trustee Services

We offer professional trusteeship services via our own trust company.  Speak to us about how we can help ensure your trust is managed with the utmost professionalism and expertise.