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Meeting your client’s concerns head on!

Cost and control the two big issues for people establishing family trusts.

Wednesday, June 11th 2003, 6:56AM
With recent changes in legislation, and in particular the Property (Relationships) Act 1976, most people concerned about protecting their assets from unwelcome claims have been quick to recognise the dangers they face and the security and protection offered by establishing and settling their assets into a trust.

"In our experience, the two major obstacles for most people in deciding to set up a trust are cost and control," says James Douglas, managing director of Guardian Trust. “There is a belief that trusts are very expensive to set up and even more expensive to run. The other issue, which is probably of greater concern for ‘would-be’ settlors, is that they will lose complete control of their assets and find themselves at the mercy of the trustees.”

These two issues have resulted in a surge of trusts being set up where the settlors appoint themselves, and often another family member or a close friend, as trustees in order to maintain control and save on costs. “There is absolutely no problem with this” says James, “ as long as the trust is managed properly and meets the requirements for a valid trust.

There is a certain amount of administration that needs to be done, even if the family home is the only asset in the trust. The risk comes in when there are no proper records of the trust administration and/or the trust assets are not managed as required by law. The first consequence is that the trust could be held to be a sham – which means a lot of wasted time and cost because the assets will not be protected as intended. Secondly, and perhaps more importantly for those who have agreed to be a trustee of a trust without anticipating much involvement, the trustees are personally liable for any loss to the trust as a result of mismanagement of the trust property. Proper trust administration is critical."

As professional trustees, Guardian Trust has extensive experience in dealing with the problems and risks that face trustees. “These are no different for a private trustee.

We looked for a solution that would enable clients to be trustees of their own trust and minimise their exposure to risk," says James. “What many private trustees need, and want, is access to administrative and management expertise on a ‘pick and mix’ basis.”

Giving them what they want Guardian Trust decided to ‘unbundle’ its full trust administration and management service to make each component of the service available individually, each individually priced.

This innovative approach to trust management enables people to confidently be trustees of their own trust and as such, maintain control of the trust assets. This approach also addresses concerns around cost – you only pay for the services you select.

Guardian Trust launched the new trust service FlexiTrust towards the end of 2001 and it has fast become a popular alternative for those clients wishing to protect their assets and their families through a trust - and remain involved in the management of their trust.

Alongside FlexiTrust, Guardian Trust also launched a Monitored service which is a ‘package’ of services which addresses the regular core duties and responsibilities of a trustee.

"Clients that have opted for these new services are delighted to have the ability to choose. Our full trustee service is still a popular choice for clients who don’t want the burden of fiduciary responsibility, ” says James. "Our aim is to give our clients peace of mind and we do this by helping them protect the assets in a trust and enabling them to choose the level of their involvement in their management of their trust. With professional support from Guardian Trust on tap, the risks and administrative concerns are no longer an issue."

The advisers who have referred their client’s estate planning needs to Guardian Trust over the years are highly supportive of this new trust management service for their clients.

According to Larry A Stead CFP, "As a financial and investment adviser, my primary role is to make sure that I give my clients the best possible advice to meet their financial goals and helping them protect their hard-earned assets is a high priority. A professional estate planning provider that offers choice and flexibility, like Guardian Trust, means my clients are not forced into a “one size fits all” trust management structure.”

For more information on the Guardian Trust range of trust management services, please call your local Guardian Trust branch or toll free, 0800 TRUSTCARE. - Advertorial

« Duties of the TrusteeTrustees need to be aware of the risks »

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