Over the last few years, I have had a number of my clients with Family Trusts ask my advice on whether they should retain the Trust going forward. As part of providing financial planning advice, we also make recommendations to our clients about whether a Family Trust is relevant for them or not.
Although having a Trust can be seen as 'sexy' and 'fashionable', for people who are not self employed, and are in stable long term relationships, we often come to the conclusion that the disadvantages and costs of running a Family Trust often outweigh the value of having a Family Trust.
However, in other situations, a Family Trust may well be worthwhile. Sometimes though, there is no choice. Sometimes, the best way to pass on assets between generations is through a 'testamentary' trust which is set up under a Will.
I am not a lawyer, so these comments are from a financial planning perspective. For many years, where our clients do have Trusts in place, we have encouraged them to NOT have professional advisers as Trustees. This is from experience and watching what can happen with Trusts. We encourage our clients to have trusted friends and family members as Trustees, but with instructions that it is important to purchase in good quality legal, investment, financial and accounting advice.
I read this excellent article by Diana Clement on the weekend, and it reminded me of the issues that are associated with running and operating a Family Trust. It is vital to cross your i's and dot your t's, but if you get good external advisers, in my opinion, there is no need to pay the exorbitant fees discussed in this article.
This is where a good, trusted financial adviser and legal adviser can be worth their fees, to help the non expert trustees sort things out.
Trust expenses can whittle away an inheritance
The other point that it is worth making, is that based on the article (and the comments), if you have dealt with Public Trust to set up your Will, it may be worth making other arrangements (unless you are happy with dealing with them.)
If you have any thoughts or opinions that you would like to share, visit us at our Twitter, Facebook or Linked In pages, and comment.
For more blog entries that you might be interested in:
Why you need to get the right legal arrangements in place to protect yourself!
What is your number? – How long will you live for?
$112 million – going going…. Is any of it yours?
By Carey Church
