The most common factors in choosing appropriate Trustees for your Trust or Will, by estate planning expert Robert Cartmell.
Trusts as a concept known to most people and are commonly found alongside most Wills for families. Likewise, “Executors” are also trustees of the terms of a Will.
Does it matter who are appointed Trustees of a Will or Trust?
A Will contains certain provisions that an Executor is obligated to undertake. Within those terms may be discretionary elements or powers.
Most Wills also contain some form of flexible Trust such as an ‘interest in possession trust’ or ‘discretionary trust’. With such trusts there is a wider set of duties and obligations. Likewise, the flexible nature of the Trust lends itself to additional powers in terms of how and when beneficiaries receive their inheritances and also how assets are managed within the confines of the Trust.
So, choosing appropriate persons as Trustees is one of the key elements to ensuring that the assets and estate are passed in the most effective and efficient way to the people who are benefiting. Robert Cartmell sets out below the main factors to consider in choosing correct Trustees for your.
Tip 1. Protect your Primary Beneficiaries
In most Wills or Trusts, it is the family members who benefit. That could mean a surviving spouse and/or children. A beneficiary can be a Trustee. In a standard Trust you can have any number of Trustees (although Executors are limited to four in number at any one time). By appointing those primary beneficiaries as Trustees, you are helping to protect them and their interest by ensuring that decisions are only taken with their consent as Trustee. But remember that a Trustee can only act once they are over 18 years of age. So if you have children under this age, consider someone to represent them at least until they are old enough and mature enough to act.
Tip 2. Consider having an Independent Co-Trustee
For discretionary trusts, consider having one person as a Co-Trustee who is independent of the primary beneficiaries. Independence can be a useful protection and to ensure the wishes are properly and fully carried out. However, remember that the role of Trustee is a burden and thus consider whether having a professional independent Trustee might be more appropriate.
Tip 3: Consider appointing an experienced Professional Trustee
A ‘Professional Trustee’ is a person or firm who undertakes trusteeship as part of their normal working/business activities. As such, they should be well versed in all of the main legal and financial requirements for the sound operation of the Trust. Additionally, they are independent of the beneficiaries. A professional Trustee of experience and expertise can really add value. ‘Value’ in this sense is both to the beneficiaries and also to the co-trustees. For more information, see this article.
Tip 4: Appoint Trustees who have Sufficient Capacity to undertake their Role
A Trustee must be capable of understanding the terms of the Trust (in layman’s terms at least) and the objectives and wishes of the creator of it. Likewise, they must be then able to properly communicate with Co-Trustees, beneficiaries and third parties (such as HMRC). They must be able to give clear instructions and advice. They must be able to respond in a timely manner to requests. Choose your Trustees bearing those points in mind. It helps the smooth running of the Trust (and also keeps time-cost down) where the Trustee responds swiftly to communications and reads documents properly and fully to ensure they are attending to their duties. Likewise, it helps for a Trustee to be versant in email communications and able to process information and documentation relatively quickly.
Tip 5: Being a Trustee is a Burden not a Benefit – consult your intended Trustees before asking them to take on that burden
In choosing your Trustees wisely, consult them properly first. How do you go about this? To start with, find out more about of the role of a Trustee before you consult them. Check the legal obligations for running the type of Trust you are creating. Check what time/skill/management/effort is likely to be required in the role – and do so before consulting your Trustees. Then, in consulting with them their role, weigh up whether they can shoulder all the responsibility and burden without appointing an independent professional Trustee. If they cannot, then suggest that a professional is appointed to shoulder the burden and to take the responsibility for ensuring the Trustees discharge their duties properly.
If you would like help or advice from Robert Cartmell on the issues raised in this article, please get in touch. Email Robert Cartmell Consulting at info@robertcartmell.co.uk to make an enquiry or arrange a discussion.