Putting trust in independence
By Simon Voisin, Forward Group Limited
Trusts have many purposes and can be useful to safeguard family assets. When setting up a trust a key decision is whether to choose a corporate or an independent trustee.
Whether one chooses the corporate or independent route, the overarching duties of a trustee remain the same: to be impartial, preserve and enhance the corpus of the trust fund, and to ensure that the trust is administered for the benefit of the “objects” (the beneficiaries) of that trust. Given the fundamental duties of care, appointing the wrong trustee can lead to disputes between beneficiaries and trustees, leading to a breakdown in relationships resulting in expensive legal and professional fees.
A trustee does not have to be a professional, but it makes sense to consider appointing a qualified, well-regulated and professionally insured specialist. Perceived additional running costs are far outweighed by the benefits of regulatory oversight, specialist knowledge and experience. They will be better placed to maintain objectivity and impartiality, and ensure the wealth is protected and decisions are not subject to influence that undermine the trust’s purpose.
Issues with a trust often arise when an unqualified or inappropriate trustee is appointed, and there are well-documented cases where questionable management of a family or an individual’s financial affairs has had significant impact on the family. A prime example is Britney Spears’ legal battle with her father, Jamie Spears, which was the subject of extensive media coverage. Considering speculation about her mental health around the time Ms Spears consented the curatorship, and the reported level of fees her father took during his tenure, it raises the question why an independent conservator or trustee was not appointed at the outset.
Why is independence not viewed as an essential criterion when considering a trustee?
An independent trustee who does not feel the pressure to continually focus on profitability is becoming less common, but is invaluable. Independent trustees can be flexible and tailor their approach to each situation, as the decision makers of the trust company are invariably the same people that the family deals with on a day-to-day basis. An independent trustee will become a trusted adviser, get to know the family properly, and form meaningful relationships with the beneficiaries, taking time to understand family dynamics, challenges and aspirations. This is not something that can be achieved when there is a permanent eye on the bottom line.
The independent trustee must raise awareness of the value of their perspective, and how it is fundamental to the successful long-term stewardship of a trust. Whilst wealth creators and prospective beneficiaries may not have focused on the value of this more personal approach, an independent trustee can certainly offer an alternative view outside the corporate world where profit is king.
Simon VoisinGGI member firm
Forward Group Limited
Fiduciary & Estate Planning
T: +44 1534 721420
Forward Group Limited is a regulated Trust and Company services business located in Jersey. Jersey is a top-tier, low-tax jurisdiction. Forward provides regulated corporate and trust services to a broad spectrum of clients, including listed companies and high-net-worth individuals.
Simon Voisin, Director with Forward Group, has over 30 years’ experience in providing professional fiduciary wealth management services to private and corporate clients. He has worked for both independent and institutional trust companies and was previously head of a single-family office.
Published: Trust & Estate Planning Newsletter, No. 09, Spring 2022 l Photo: allard1 - stock.adobe.com