Most Trusts are proposed as expert solutions and vehicles to minimizing the problems of gift, estate or income taxes, mostly for a quantitative goals at the outset. As time progresses, and if it succeeds on the quantitative goals it has laid out for itself, it will no doubt produce a qualitative result for the Trusts cape.
The consequential qualitative side of Trusts are often neglected in discussion and planning, which results in proper discussions leading to secure planning on this front falling by the wayside. This falls on the shoulders of the Trustee to carry and channel the intricacies of managing the beneficiaries, an orientation of the human capital if you will.
Whilst most Trustees or Protectors are focused to deal with the Trust correctly (in line with law and regulation), but above all it should be protected for the true good of all affected by it. Members of Trust scape – Trustees, Beneficiaries, Protectors, Settlors and Advisors are essentially married to each other and should thus make the harmony of the relations a priority whilst balancing the wishes and legacy the Trust Deed demands.
It can therefore be said that trusteeship is far more than a matter of administration, even if unpaid, it is a noble profession. I could also be said that it is equal to the nobility of the professions of medicine, law, teaching and the clergy. Even if a Trustee serves only a few hours a week, he or she is serving in a tradition that goes back centuries and has an inner-worth of its own.
5 Principles of Trusteeship
In the Book Family Trusts by Hartley Goldstone, James Hughes Jr and Keith Whitaker, the interesting concept of the basic principles of Trusteeship is explored. It is not intended to replace the prudent responsibilities of the trustees such as prudence, care, impartiality etc., but rather to reinforce the fiduciary character of a Trustee or Protector. What Trusteeship looks like will change according to trust purpose (tax, wealth management or loving financial gifting for future generation), place and situation. What makes up its core will give shape to the Trust amidst the various circumstances.
1. First, do no harm
This is the first oath in any noble profession. Doctors swear it in their oath, teachers and the legal profession generally have their own versions whether spoken or unspoken. This reminds us that Trustees have an intimate relationship to the Trusts cape and can do no harm.. Not honoring the trust behind the TRUST will most certainly do harm and ruin relationships. As a Trustee you will most likely be privy to personal information such as financial behaviors, health, bad habits, good habits, intimate and private information which must be handled with delicacy to preserve the Trust scape. In addition many Trustees may find themselves having to deal with Trust Fund Babies: beneficiaries who find themselves without work, stimulus or purpose, dependent on their distribution. Money or family dynamics could result in a collateral mess on the doorstep of Trustees and the Do No Harm principle must prevail for the sanctity of the Trust scape.
2. Fidelity
Trustworthiness may be said to be the core value of a Trustee. A Trustee remains a servant, not an agent, and should be appreciated as such. Trustees owe their fidelity to the Settlor, The Trust, themselves and the Trust scape as a whole and are not deemed to be a Genie in a bottle to beneficiaries (looking at you, Trust Fund Babies…). The purpose of the Trustee is to keep alive the Trust Deed and the Spirit of the Trust itself, and this can only be achieved through fidelity. This role should start by helping the Settlor write down core wishes and values for the Trust, as best explained through example by the documented Legal Trust practice of Jay Hughes Jnr (co-author of Family Trusts – a Guide for Beneficiaries, Trustees, Trust Protectors and Trust Creators) who in principle insisted that any person who entrusted him with the setting up of their Trust, write the below 2 lines at the beginning of the Trust Document:
“This trust is a git of love, it exists to enhance the life of the beneficiaries”.
3. Regency
It sounds quite grand and we all see bedazzled crowns and gold leafed carriages when we think of Regency, but in the context of the Trust, it comes to the basic point that the Trust must be managed in such a way that if the beneficiary comes to maturity, the Trust could be dissolved in full faith (like raising a baby for 18 years and then unleashing a hopeful adult on the world in full faith that it won’t be the cause of its own demise). Regency pivots itself on 2 pillars in the context of a Trust: Independence and maturity of the beneficiaries. Significant wealth can often turn into a black hole if mismanaged and not managed by faithful Trustees – the point is in the intention, and for regency which holds within it the value of humility which is very hard to maintain in the unnatural landscape of a legal
framework such as a Trust.
4. Discernment
A Trustee or Trust Protector must be bound by undeniable discretion and model him or herself on prudence and discretion in embracing all 5 proposed Principles of Trusteeship suggested here. This is the basis of discretion and the Trustee must be able to sift evidence and consequence of beneficiary request, and bat or embrace same according to the Spirit of the Trust. It requires asking yourself as Trustee whether you are up to the challenge of acceptance and if you possess the necessary skillset for the maintenance of the core intent and wishes of the Settlor and Trust in all circumstances. Educating the beneficiaries on the manners of discernment to be adopted by Trustees, will instill in beneficiaries a reflection in themselves on distributions and honoring.
5. Courage
It takes courage to create a Trust, and it takes courage to weave the existence and intricacies of a Trust into your daily life as a beneficiary. It also takes courage to accept the role of Trustee or Trust Protector given the broad shoulders, time commitment and values on display. It is often a long road to be walked with families, and requires a personal commitment to understanding the personalities and dynamics within the Trusts cape. This calls you to navigating same as an orchestra to ultimately produce the music of the Spirit of the Trust. It is, in principle, encouragement to beneficiaries. The courageous Trustee can help beneficiaries explore their careers or purpose, make connections and achieve their goals in a sustainable way. It is easier to
write a check when the funds are begging to be spent and the hands are eager to take it. It takes courage to encourage, guide and mold beneficiaries for the greater good of the Trust and the legacies laid out within it.
These principles are to prompt a reflection on the purpose of Trustees, the responsibilities that come with this and due considerations to be taken prior to acceptance of the role of Trustee, but also to emphasize the importance of embracing the delicate balance between impartiality, care and protecting the Spirit of the Trust. It is for this reason that any Settlor should take due care and expert advice when setting up the Trust and ensuring the core wishes and legacy is preserved.
Our team at Temple Group is well equipped to sit down and discuss any questions or strategy in line with Trust protection, legacy and wealth management.
Contact us on [email protected] today for a free consultation.
