PAM Guide to Wealth Management

Holding a trustee to account

A trustee has a duty to two parties - the settlor and the beneficiaries.

A trustee needs to ensure it follows the settlor's wishes as laid out in the trust deeds. The trustee also has a duty to the beneficiaries of a trust. The trustee needs to act in the best interests of the beneficiaries at all times and to manage the trust funds in the best possible manner.

However, some individuals have concerns about passing complete control over to trustees. It is important to keep in regular contact with the trustees, to ensure that all parties are happy with the management of the trust.

You may also wish to appoint a protector. This is an individual who is appointed to review and, when needed, direct trustees actions. The range of powers a protector has will be limited by the trust documents and the law governing the trust. Some individuals may choose to use their legal adviser, or a trusted close contact, however it is possible to engage the services of a professional protector.

Similarly, a guardian can be appointed to a foundation to hold its council to account. Indeed, Jersey and Guernsey foundations require a guardian to be appointed.

Despite these safeguards, issues can still arise. The first step is to speak to your trustee. The action may be a mistake, or a misunderstanding, which can be mutually resolved. If this does solve the issue then you may wish to seek legal advice. Some problems will need to be taken to court to be resolved and will require the services of a contentious trust lawyer. Your private client law firm may offer this service, or your trusted adviser should be able to recommend one.

Contentious trust lawyers are increasingly engaged when setting up a trust, to review the documents and trust deeds, to try and foresee potential issues and redraft the documents accordingly, before the trust is established, to avoid potential problems arising later. You may wish to ensure you lawyer does this if you are setting up a new trust.

Purchase the PAM Directory Now

The PAM Directory is a comprehensive guide on comparative data focusing on asset managers, investment managers, private banks, stockbrokers, wealth managers and multi-family offices, who provide discretionary and/or advisory portfolio management services for private clients.

Order Now

Subscribe to PAM to hear about the latest news and promotions