Trust Management

Keitha McClure Asset Protection, Business Strategy & Planning, Odds & Ends

A family trust is like an insurance policy. You perceive a risk such as high taxes, asset testing, business failure, or relationship property and use a trust to insure against that risk. However, just like an insurance policy, a trust will not cover the risk if you do not manage it properly.

Failure to manage family trusts correctly will put the integrity of the trust at risk.

Once you transfer property to a trust, it no longer belongs to you. It belongs to the trustees who hold it on behalf of the beneficiaries. If you and your family continue to treat the property as if it were your own, then you run a very real risk of a court deciding that there is no trust if its existence is ever challenged.

A family trust is not a separate legal entity, unlike a company. The existence of a family trust is evidenced by proper administration and record keeping.

The following is a list of basic requirements for managing your family trust well:

  • Regular meetings of trustees to review the asset position of the trust, consider the needs of the beneficiaries, and review the annual financial statements and trust investments
  • Keep records of ALL trust documents. If your family trust doesn’t have an independent trustee this is even more important
  • Ensure the trust has its own bank account and ONLY trust transactions go through this account.
  • Every trustee must be treated as an equal (even the independent trustee) and take an active role in the decision making of the trust

A successful trust requires professional advice on setting it up, confirming the Trust Deed and with that ongoing management.

Just like business or investment planning, a strategy must be implemented for the objectives of the family trust to be achieved.

A successful trust will ensure that the settlor’s assets are protected against challenge and loss. A successful Trust is one that has been well managed and is a bit like a fort that can be successfully defended from all potential claimants.

If you think you would benefit from setting up a Trust or would like a run through of your current financial structure give us a call (or email) and we can help you out or put you in touch with a legal team that has the expertise to get your sorted.