Being a Trustee 24/02/16

The world of Trusts is becoming ever more scrutinised and an inadequate service is unlikely to be tolerated. The modern Trust administrator faces a set of challenges. The landmark events that occur in the lifetime of a Trust, be it the need to raise cash for beneficiaries or reorganisation after a death, bring the need for professionalism into sharp focus. The increasingly important weight given to Trust assets in portfolios puts the Trustee on notice that independent, professional advice is necessary if the assets held in the Trust are to be dealt with properly.

Assets in a Trust need to be dealt with in a thorough, professional and well informed manner. The Trust Fund must be managed adequately, as failure to do so can be hazardous in a world of increasing litigiousness and regulation.

The “buck stops” with the Trustee. Events bring this issue into focus. Perhaps one of the most common milestones is the death of the founder of the Trust. It is a fiduciary matter, as all assets that sit in a Trust structure have to be treated with professionalism. One of the key risks is the financial impact that can occur when a portfolio is not actively managed. Leaving the assets unmanaged means there could be a future cash requirement which may leave the Trust administrator at risk of litigation.

KEY STEPS

The key steps that a Trustee should take are as follows:

BE PROACTIVE

Do not wait for an event to occur, such as the death of the settlor, before coming to grips with the issues around assets held in Trust. Get on top of the matter well in advance.

DIVERSIFY AND REVIEW

Knowing what is in the Trust and what it is worth is key to the Trustee being able to do a decent job. There is duty to diversify and review assets held in Trust.

TAKE PROSESSIONAL ADVICE

Ensure the advisor is independent and not conflicted, which in practical terms means they should only make their fees from advising you, rather than through the consignment and sale process.

MAKE SURE THERE IS AN AUDIT TRAIL

Maintain a full record of the advice received when it comes to assets and portfolio strategy. If there is a dispute with a beneficiary, an audit trail can protect the Trustee from litigation.

If you have any questions on Trusts or acting as a Trustee please contact either Angela Pelleschi or Emma Beckhurst on 01489 885 788 or 02380 633 225 or by email apelleschi@jaspervincent.com or ebeckhurst@jaspervincent.com