1 in 4 advisers hit with problems when family members are trustees

Adviser research from Skandia International has uncovered that 22% of advisers have experienced problems with a trust arrangement ending in a dispute when family members are appointed as trustees. Skandia says that there are a couple of alternative options that can greatly help advisers and their clients; including setting up a protector on the trust, appointing a corporate trustee to manage the trust, or a combination of the two.Appointing family members as trustees is often viewed by many as the obvious choice, as family members are those closest to them and they believe they will ensure their wishes are carried out on their death.However, what can often happen is that upon the death of the settlor, the family members can start to fall out and may not see eye to eye on how assets should be distributed to beneficiaries. Family members are emotionally attached to the situation and may have vested interests, so may find themselves in a position where they have a conflict of interest.{desktop}{/desktop}{mobile}{/mobile}Setting up a protector can help, says Skandia. A protector is an individual (or company offering fiduciary services) who can be appointed to fulfil certain duties and responsibilities. The protector will also be given certain powers under the terms of the trust. They do not manage the trust and are not responsible for the administration of the trust or ensuring any tax is paid correctly. However, they do have the right to dismiss a trustee, and where there are disputes or uncertainty among the trustees, they can make the final decision to be taken by the trustees in respect of allocating trust property to beneficiaries (other than for Bare Trusts).In the recent international adviser survey, advisers listed the following as the top three benefits for corporate trustees;1. Professional oversight2. Professionals ensure the wishes of the settlor are considered3. Professionals ensure taxes and liabilities are taken care ofPaul Schrijver, international specialist for Skandia international, said: "The role of trustee carries with it significant responsibilities. People who appoint family members as trustees may not be aware of the burden they are placing on them and the risk of family conflict they are creating. Using a corporate trustee can help relieve this burden, and setting up a protector can give valuable reassurance to the settlor that a family member or other third party such as a solicitor, will have the legal power to oversee the trust on their behalf."Skandia International Q2 2014 adviser survey, completed by 377 financial advisers from across the globe.

1 in 4 advisers hit with problems when family members are trustees

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