Finding a trustee: what should I look for?
Appointing a trustee to oversee a trust agreement is an important process and one which should be carried out with careful consideration. From the outset, settlors (or existing trustees) need to be comfortable with the individual or group they choose to run their trust scheme - which could last for a period of many years.
The factors and qualities required for the successful management of a trust vary across circumstances. While a friend or a family member may be suitable for a smaller types of trust, like an inheritance or estate, larger and more complicated plans often require the more specific expertise of a professional trustee.
Avoiding the pitfalls...
A benefit of trustees with personal connections to a trust could be a clearer understanding of the subtleties of a given plan and the particular needs of its beneficiaries. Problems can occur, however, when conflicts of interest arise - financial decisions made by family on behalf of other family members can easily create disagreement and resentment. It is in these situations that an independent, professional trustee can be advantageous.
Anyone looking for guidance on how to appoint an independent trustee might first want to consider the amount of time required for the management of a trust. The larger the trust and its assets will almost certainly entail a proportionate time-commitment. Independent trustees, operating on a professional basis will charge for their time and the fee you pay will reflect the demands of the workload.
Other basic requirements of the trustee position include:
Administration: a trustee should be able to carry out any administrative or legal obligations required by the trust. This includes the payment of any tax due.
Communication: trustees, working as part of a board need to be able to act unanimously. Trustees also need to be able to advise and inform beneficiaries on every aspect of the trust agreement.
- Distribution: trustees should know when and how the assets of a trust are to be released to beneficiaries.
Going the extra mile...
The appointment of an independent trustee should be more than just a measure to avoid potential conflicts of interest amongst friends or family members. A good independent trustee will be able to fulfil the duties outlined above, but also recognize opportunities and potential for the investment of a trust's assets. Using a financial organisation offering independent and professional trustees means being able to select from a pool of personnel with a range of financial backgrounds, including lawyers, actuaries and accountants. Tailoring an independent trustee service to the specific needs of a trust is a strategy for enhancing that trust's assets, and the eventual payout to beneficiaries.
A trustee is also required to protect a trust from potential losses - failure to adhere to the regulations governing trust management can result in fines and penalties - affecting not just the trust, but trustees themselves. It is in the interests of every member of the trust agreement that trustees are able to execute their duties competently and efficiently - finding a good, independent trustee is a way of achieving that goal.
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