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(extract from November 2006 Newsletter)
We firmly believe that a properly set up and administered Family Trust is one of the best estate planning tools available today. Furthermore, a Family Trust is a long term investment in your future and it is important to understand that if you haven’t got one when you need one – its way too late.
What also concerns us is the number of people we come across on a daily basis that have Trusts but don’t really understand what they are all about.
Sometimes Trusts have been set up and then the clients are left virtually ‘abandoned’ by their advisors.
In one notable case a client went to a Trust advisor and asked to have a Family Trust set up to protect her assets in the long term. The Trust was set up exactly as asked. No assets were transferred into it at any stage and when the client came to us she stated that she already had a Trust and was confident that that would suffice. When it was pointed out to her that her Trust wasn’t worth the paper it was written on, she demanded answers of her advisor, who replied ‘at that price what did you expect?’
This emphatically highlights one of the fundamental problems in setting up Trusts. Clients somehow seem to think that once the initial documents are signed then they can simply walk away and forget about it. And we have many examples of Trust advisors who are also too happy to let this happen, although thankfully these are well offset by some outstanding experts in this field amongst our professional colleagues.
The real problem with a poorly administered Trust is that it can be compared to an insurance policy. We happily pay insurance all our lives but don’t usually really understand the intricacies of our policies until the house burns down. Then we learn very rapidly the impact of underinsurance or failure to provide the necessary detail.
Although we have been in the business of Trusts for some time, 2 years ago we developed a Trust Model which incorporated all the legal, accounting and administration aspects to create the profile of the ‘ideal’ Trust.
This included checks and balances to ensure that profile could be maintained for the lifetime of the Trust and procedures to ensure the standards of our corporate Trusteeship are maintained well after we as individuals have departed the scene.
This model has been scrutinised by one of the leading Trust advisory firms in Australasia to the extent that it is now being considered for adoption by them as the standard work on Trust administration.
Furthermore, we invite you to attend one of our 40 minute Trust presentations entitled ‘Family Trusts – The Things You Have To Know’ completely free of charge, whether you are a client or not. For more details of this offer please contact Dave McPhedran
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