Trusts are created for many reasons. Such reasons include ensuring loved ones have future financial support; they may be too young to manage their own finances or cannot look after their affairs.
A trust involves three main parties. The settlor, the person who puts the money or assets into the trust. The beneficiary, the person receiving the benefits from the trust, and the trustee, who is responsible for managing the trust.
When choosing a trustee, many people select family or friends, as they are someone they trust. However, this can be problematic as emotions may run high. The position of a trustee comes with many responsibilities, a lot of which are incredibly intimidating. The family or friend may not be entirely impartial to the situation, despite having the beneficiary’s best interests at heart and technical areas such as tax, creditors, and marital disputes may not be fully understood.
A Professional Trustee is for the best. Firstly, they resolve conflicts of interest. If several trustees are family and friends, they may all have opposing views of what is best for the beneficiary. Alternatively, if a trustee feels their job conflicts with the trust itself, they may not want to be involved.
A Professional Trustee, especially an experienced one, would also have the knowledge needed to act in that position. An experienced Professional Trustee will have been exposed to multiple scenarios when managing a trust, therefore having the capability to advise on various situations. In addition, they will have a wealth of professional resources and skills related to that field. It would also reduce the possibility of hiring a lawyer, solicitor or external advisor, which could be expensive.
They will also understand the legal jargon, much of which will probably not be familiar to a trustee who is a friend or member of the family. The Professional Trustee will understand tax liabilities, how to avoid heavy taxation maximising the assets on behalf of beneficiaries for a nominal cost.
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This article was submitted to be published by CTT Group as part of their advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.
