It seemed a good idea at the time. When your Will was drafted, you included a trust to safeguard part of the inheritance. Perhaps it was to protect a vulnerable child or help reduce your tax liability. For many of these smaller trust funds in existence now, the reality is they are not performing and producing the income once envisaged.
Ten years of record low interest rates have resulted in often negative growth, especially if you have to take out professional fees. With the settlor long since passed away, it can become uneconomical for professional asset management companies and bank trust services to manage these smaller trusts.
Under these circumstances, one of the options available to the trustees is to close the trust. The assets are then distributed to the current beneficiaries of that trust and the beneficiaries in turn agree to indemnify the trustees against any future claims.
Many trustees are reluctant though to rely on these indemnities as a complete protection from future claims, so the trustees often seek insurance as well. This insurance will “back up” these indemnities in case they fail and insure the trustees.
Kate Thorp, Manager of DUAL Asset’s Executor & Inheritance account, stated:
“We have seen an increase in such enquiries in the last year, especially for smaller funds. Insurance will give the trustees peace of mind should the beneficiaries’ indemnity fail and protect the trustees from future claims from unknown beneficiaries coming forward and claiming part or all of the trust fund after they distribute the assets. Trustees have had a difficult time managing these funds in the last ten years due to economic circumstances, which are outside their control, but there are options available to them. Someone drafting their will 30, 40, 50 years ago, or even longer, would have had the best intentions at the time. No one can predict the future though and the uncertainty it can bring.”
To find out more about how Executor and Inheritance insurance could help, please contact Kate Thorp.
Kate Thorp, DUAL Asset
+44 (0)20 7337 8775
kthorp@dualgroup.com
This article was submitted to be published by DUAL Asset 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.
