Why use a Professional Trustee?

 02 September 2020

Not choosing a professional Trustee could mean your beneficiaries lose out. Watch the video to find out the benefits of having a professional on your side.

No time to watch the video? Read the transcript instead!

 

Being a Trustee carries a great deal of responsibility. Trustees need to know and adhere to the terms of the trust and can be held personally liable for any losses made by the Trust if they don’t carry out their duties properly.

So, it’s surprising to learn that when people set up a Trust they often look to their children, relatives and people they trust, as their choice of Trustees to manage the Trust assets, after they have gone.

Baffling when you know that ALL of the Trustees need to be in complete agreement about every decision made and how often this leads to disputes, especially where the Trustees are also beneficiaries of the Trust and “conflicts of interest” can arise.

For example, there have been cases where the surviving parent has requested money from the Trust but the Trustees, their own children, have refused this, picturing their inheritance being lost. Imagine having your own children in charge of how you spend YOUR money! 

When an untrained person is appointed as a Trustee, decisions will be made which may not be completely in the interest of the beneficiary(s) because they don’t have a clear understanding of the impact their decisions may have on the beneficiary’s inheritance.

They could distribute funds to beneficiaries and inadvertently lose the protection a Trust offers, undoing the original reasons behind the Trust planning, such as asset protection and so exposing the assets to risk.

There may also be difficult and sensitive decisions to be made by the Trustees. There could be beneficiaries who are financially irresponsible or at risk of wasting their inheritance, perhaps because they have an addiction or a mental illness.

Take Jonny, known for his reckless spending habits, he asks for money to buy a new car. A Trustee related to Jonny might find it difficult to refuse him, whereas a Professional Trustee would simply approve the purchase of a Fiat rather than the Ferrari he had asked for!

 Then there’s Alison, who’s in a relationship with someone likely to exercise control over any inheritance she received outright, and young Danny, who is disabled and has means tested benefits. Benefits he would lose if he inherits a lump sum of money outright!

A professional Trustee will ensure funds are distributed in line with the Settlor’s wishes, in the most tax-efficient manner and with the maximum protection. They cannot be swayed by pressure from a beneficiary and take a totally unbiased approach when dealing with the deceased’s assets.

Professional Trustees assist other Trustees ensuring all of them meet their legal duties and responsibilities and act in the best interests of the beneficiaries as a whole. It’s a balancing act between satisfying the request of a beneficiary while also protecting the interests of the other beneficiaries.

The simple truth is that a professional trustee who does their job keeps the Trust out of trouble, usually expensive trouble that a lay Trustee would not have seen coming. They’re like the Family Trust Police!

But using a professional Trustee costs money. True, but it’s important to remember WHY you set up the Trust in the first place and if it’s not being run properly then you wasted your money and chances are your money could end up being wasted again!

If our car needed some major repairs, few of us would attempt a DIY job and would seek out a qualified mechanic to do the work, in the knowledge that our car being safe to drive far outweighs the costs involved. Cheap can be expensive in the long run!

Why take the risk? Appointing a Professional Trustee means making sure you put your money in hands you really can trust.

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At each stage of the process, Paul Hammond - the Directory of Panthera, explained in simple understandable language what was going to happen and if there would be any complications. None happened, I am sure, because of his eye for detail.

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