Best interests: The act
allows a trustee to make
investment decisions as if
the trustee is the absolute
owner of the trust. It
also grants the trustee the
power to invest in anything,
which means that
if there are a number of
trustees, each one has
an equal say in how the
trust is invested. So it is
essential that trustees are
selected to ensure that the
best interests, and perhaps
the original interests, of the
trust are upheld.
Seek advice: Trustees
are also required to follow
standard investment criteria,
which require all trustees
to consider the suitability
of the trust to the
investment and the need
for diversification within
the investments.
But one of the key
responsibilities of the trustees
is to seek ‘proper’
advice from a person the
trustees believe to be reasonably
qualified through
knowledge and practical
experience of financial
matters relating to the
proposed investment. This
responsibility requires that
the trustees seek appropriate
financial advice before
they make a proposed
investment and ensure that
they continue periodically
to review the suitability of
any particular investment.
l Becoming a trustee
Potential trustees must also
understand their responsibilities
before agreeing
to help administer a trust.
The demands on trustees
are substantial, with the
need for self-assessment of
tax and the maintenance of
clear records of both the
amount and the nature of
income received. While a
simple life policy is unlikely
to need too much work
before a claim, balancing a
series of investments could
involve a huge effort.
Appointed trustees face
some significant long-term
legal responsibilities, which
can include understanding
and complying with the
terms of the trust, meeting
regularly to review the
trust and its assets, and
documenting all decisions
made and actions taken.
Responsibilities also extend
to keeping up to date with
any change in trust law
and, if applicable, filing the
appropriate tax returns.
l The professionals
Anybody creating a trust is
working on the core principle
that the trustees will
CHOOSING A TRUSTEE
� Will the trustee maintain an unbiased view when the trust is
distributed?
� Will the trustee comply with trust conditions and general laws?
� Will the trustee adhere to the best interests of the trust?
� Will the trustee comply with trust conditions and general laws?
� When necessary, will the trustee seek professional advice?
ensure the trust assets are
paid to the right people at
the right time, as well as
ensuring the client benefits
from the added value and
tax savings a trust can
offer. But further value can
be added and risk reduced
by using the services of a
professional trustee.
Professional trustee
services can deliver significant
benefits to clients and
advisers, and should enable
the adviser to focus on the
client with the confidence
that the day-to-day requirements
of the trust are being
well managed.
A professional trustee
can provide a convenient
way for the client and the
adviser to manage the
investment and the trust,
and can also reduce the
workload for advisers by
ensuring all queries and
issues are dealt with quickly
and efficiently.
l A precise art
There are other distinct
advantages to having a
professional act as trustee.
In addition to overcoming
any problems in selecting
personal trustees, all trust
paperwork is professionally
dealt with, respecting the
client’s wishes. Professional
trustees also ensure that the
client’s wishes are carried
out precisely in line with
their requests and that the
trust is kept up to date with
any changes in trust law.
Objective trustee decisions
that keep in mind the
aims of the trust can be
made without personal
AUGUST 2008 [www.international-adviser.com] INTERNATIONAL ADVISER
technical
complications and can
assure a client that their
wishes will be fully considered.
In addition, the level
of professionalism gives
the client confidence that
trust provisions and laws
are not being breached.
A professional trustee
also removes the moral
and personal burdens of
providing objective trustee
decisions that might weigh
heavily on a friend or
family member. Additionally,
without the possibility
of personal complications,
a client can be confident
that their stated wishes will
be fully taken into account:
imagine some of the difficulties
a family member
might face attempting to
cater impartially for children
from previous marriages,
or ensure fair distribution
of funds for a
widow or widower.
For investors looking to
hold their assets in trust,
finding the appropriate
trustees can be difficult.
Appointing a professional
service provides peace of
mind that not only will
assets be dealt with in a
professional and unbiased
manner, but that they will
also be handled in line
with the client’s wishes.
There are quite a few
considerations for your clients
when it comes to
choosing their trustees.
They should think carefully
about who they are
appointing and why, and
understand that the most
obvious choices perhaps
are not necessarily the
most appropriate.
“
Appointing a
professional service
provides peace of
mind that not only
will assets be dealt
with in a professional
and unbiased
manner, but that they
will also be handled
in line with the
client’s wishes
SUMMARY
Trustees must monitor any
changes to trust law and carry
out administrative functions
that non-professionals may
find difficult.
A professional service is
better suited to make objective
decisions than a friend or
relative of the settlor.
”
39
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