Effectively Building and Managing a Family Trust [Part Four] Managing a Family Trust

Once your family trust is in place your assets are now under the control and oversight of professional trustees. However, this series wants to take you through the process in its entirety. The next step is the management of a family trust, and what needs to be done in order to maintain it and keep it working as you, the settlor, intended for the benefit of the beneficiaries.

Letter of Wishes

This is the document in which you lay out your specific requests, and is a non-binding document to guide the trustees as to how the settlor would wish them to exercise their discretion. It’s provides your trustee with guidance on the proper maintenance and distribution of your assets. The letter of wishes is absolutely key to a successful family trust, but is a very personal arrangement, and should always be discussed with a professional before being finalised. The trustees or your legal adviser may provide you with a template containing areas to consider within the document but it must be very personalised to your individual and family circumstances

In a Letter of Wishes, beneficiaries are discussed, as are the potential assets that the trust will contain along with how it is envisaged those assets will be distributed in the future.

Beneficiaries named in the trust documentation will be required to complete questionnaires along with provide identification and verification documents which adds another level of security and peace of mind to your family trust.

In this document, a protector can also be named, who can be an individual or company which is appointed to monitor the activities of the trustee on behalf of the beneficiaries and to offer guidance to the trustees. They provide further confidence to the settlor that the best interest of the beneficiaries is always borne in mind by the trustee . However, the inclusion of a protector is not essential and is not common, and should be discussed with your trustee or legal adviser if you are considering one.

Updating your Wishes

We know that things don’t always work out according to plan. There may be a fall-out among family members. Perhaps your son or daughter marries someone whose intentions you don’t trust, or does something to make you doubt their capabilities with assets. Maybe the trustee you appointed passes away or retires. Perhaps a more pleasant change befalls you, like the birth of grandchildren you’d like to add as beneficiaries. In anticipation of such circumstantial changes, your trustee can make any necessary amendments to your trust, and ideally, will encourage you to review the trust along with the letter of wishes regularly.

Costs of Management

There will, of course, be costs associated with the setup of a trust and the ongoing management but as with most things, a bespoke quotation is required which will depend on the level of activity and the level of compliance costs.. It’s important to remember to ask about any fees that will be incurred when you meet with your solicitor or trustee.

Having considered the set up and management of a family trust, the remaining step is equally important, the ongoing distribution (or accumulation) of assets.

If you would like to read the rest of the series on Effectively Building and Managing a Family Trust, please click on the links below.
Effectively Building and Managing a Family Trust [Part 1] Will, Trust or Will Trust?
Effectively Building and Managing a Family Trust [Part 2] 3 Things To Consider When Setting up a Family Trust
Effectively Building and Managing a Family Trust [Part 3] Drawing Up The Trust Documentation
Effectively Building and Managing a Family Trust [Part 5] The Running of a Family Trust