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Establishing a trust is the first step individuals take to protect the assets and wealth they have worked so hard to acquire. That asset protection only endures, however, if the trustees of the trust have carried out their functions properly.
A trustee’s role is to serve the beneficiaries of the trust by ensuring they are administering and managing the trust appropriately. These days, it’s hard for trustees to know just how to do that.
There is a vast array of laws Trustees must be familiar with to ensure they do what they must do, consider what they can do and omit to do what they aren’t allowed to do! It’s confusing, to say the least.
When trustees fail to actively and correctly administer and manage a trust, the trust can be found not to have existed at all. When this occurs, asset protection can be lost. But that isn’t the only bad news… Negative taxation effects can also result as the Commissioner of Inland Revenue wades in. Additionally, beneficiaries can sue the trustees. In totality, asset protection, adverse tax consequences and litigation can abound. To avoid all these awful consequences, we recommend people appoint an independent professional trustee who acts in conjunction with them.
Independent professional trustees are both independent and professional. Thus, they don’t hold any other position in the trust other than being a trustee. They aren’t a beneficiary for example. They are also in the business of acting as a trustee for clients. Hence the label ‘professional’. An independent professional trustee’s presence improves the integrity of a trust enormously as they’ll ensure the trust is administered and managed properly. This reduces the chances of trustees inadvertently or wilfully not fulfilling their functions properly and the trust failing to do the job it was established for.
Choosing the right independent professional trustee is a hugely important task because the other trustees of the trust will rely on their expertise. It’s for this reason, an independent professional trustee should:
The role of establishing, administering, and managing trusts has become more challenging in recent times as a raft of legislation has been passed. As obligations have become more onerous, the experience and expertise needed to competently administer and manage trusts has grown. This is the reason the list of characteristics an independent professional trustee must possess is so long.
Sometimes, people will ask their friend or a family member to be their independent trustee. It has to be remembered however that the role of trusteeship is a challenging one. It’s not for the faint-hearted or the time-poor.
Trustees are personally liable for their actions and omissions and their liability is unlimited. This is why family and friends shouldn’t hold the independent trustee role. It’s not fair to place the responsibility of trusteeship on their shoulders. If they are found wanting as a trustee, they could well find their own personal assets being threatened. Additionally, rarely will a friend or a family member be able to prove they are truly independent.
Lastly, it’s unlikely friends and family will possess the time, experience and knowledge required to carry out their role. For these reasons, we don’t recommend the use of friends and family as independent trustees.
Fortunately, you don’t have to rely on friends and family to be your independent trustee. We offer that service. We have the experience, knowledge and skills required to administer and manage your trust.
Clients we work with find our presence comforting and invaluable. If your assets and wealth are worth protecting within a trust, it’s worth ensuring your trust is administered and managed correctly – tasks we are well equipped to carry out.
If you would like to discuss your trust needs, including Black + White Trust Services Limited becoming your independent professional trustee, contact us for a chat. We’d be happy to help.
Trust Management + Administration
Trust Management + Administration
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