Trusts are one of the most effective methods of estate planning. They can help ensure your wishes are followed, are tax-efficient, and can even be structured to benefit you in your lifetime. But they are not perfect and, sometimes, things go wrong. The most common issue is that the trust didn’t have the right trustees. Appointing a professional trustee is an easy way to make sure that your trust will be effectively managed, and your wishes followed.
Appointing trustees can be difficult, and they are typically chosen from family members and close friends.
These appointments have many benefits. They are trusted by the person making the trust, legally known as the ‘settlor’. Their relationship with the settlor will mean they have a good understanding of their wishes, and the ability to interpret them when it comes to managing the trust.
And they will be positively motivated. Being a trustee can, at times, be difficult and demanding. But they accept the role because of their love and affection for the settlor, and are driven by a desire to offer them one last service after they have gone.
Unfortunately, the problems that can befall trusts often lie within these benefits.
The biggest issue is that, typically, trustees are not professionals and will not have acquired the skills and experience that a trust may need. The law can be complex and difficult to understand, but trustees must follow it regardless of their own knowledge. This can result in trustees potentially acting unlawfully, for example by not taking advice, or by delegating their duties improperly. In extreme cases, if they were negligent, trustees could find themselves personally liable for any losses.
Another common risk is that trustees are frequently also beneficiaries. This can cause conflicts between different trustees when opinions differ, and even breakdowns of relationships if mistrust starts to creep in. And because trusts usually require unanimity among trustees, such differences can risk the very functioning of the trust, resulting in a legal vehicle that helps no-one and creates discord, the opposite of the settlor’s wishes.
How professional trustees help
The easiest way to avoid such problems is the use of a professional trustee. A professional trustee, as the name suggests, is simply someone who fulfils the role as part of their job. Furthermore, it doesn’t even have to be a ‘real’ person, a legal person, like our partners at Countrywide Tax Trust Corporation Ltd, can act as the trustee, effectively giving the trust the benefit of an entire company’s knowledge and expertise.
There are usually several trustees, most often between two and four, and appointing a professional trustee among these can help address the potential difficulties trustees may face.
Obviously, by having a trust professional, other trustees will benefit from the knowledge they bring, meaning they can have confidence in the trust’s processes and decision-making. And because the professional trustee will not be a beneficiary, they can offer impartial and independent advice.
But using a professional as a trustee is not just about having an impartial and expert trustee. Their benefits can go far beyond that.
When writing a trust, we take great care to understand the settlor’s motives and intent, as well as their wider situation. This means that when it comes to acting as a trustee, our partners at Countrywide not only understand the settlor’s wishes, but are also best placed to implement or amend the trust to ensure it meets those wishes while retaining its original purpose.
Countrywide’s expertise in tax and estate planning means they can ensure the trust takes full advantage of changes in legislation and regulation. And because they are acting as an institutional trustee, they are there for the long term, and can even help with trustee retirement and succession.
Using Countrywide as your trustees
While it’s reassuring to know that your most loved and trusted relatives and friends will be able to look after your interests after you have gone, it is also a big job. The role of trustee is not just about representing a loved one’s interests or enacting their wishes, it requires an understanding of the law, and comes with a set of duties that many find onerous.
Using The Right Will and Countrywide to not just create your trust, but to also function as a trustee can serve two purposes. First, you’ll know that your trust is in our safe hands, and there will always be a professional there helping to make decisions.
But second, and most importantly, you’ll know that you have ensured that all your other trustees will have the support and guidance of a professional when they need it most.