When appointing a trustee to oversee your estate, we recommend that both parties know the roles and responsibilities. A trustee is an individual or company holding and administering assets on behalf of a third party, like property.
Your needs are unique and must be communicated.
You may decide to appoint a trustee for an array of different reasons depending on your specific needs. Some of these needs could be for the administration of bankruptcy, a charity, or certain types of assets like property, retirement annuities and pension funds. In some cases, a trustee is appointed for you, for example, by the courts.
The duties of a trustee.
Once appointed, that individual is under a duty to provide clear and accurate accounts and produce any information or documentation relating to assets or trust funds when required by a beneficiary. A beneficiary could be a spouse, children or even a cat.
How to appoint a trustee.
The most important character traits to look for during selection are honesty, stability, dependability, organisational skills, a good financial background, and selflessness in giving their time and energy.
A trustee should practice their duties in an unbiased way and for the advantage of all beneficiaries. You need to realise that whomever is nominated is one of the most crucial decision made as part of any trust agreement.
Who can be appointed?
Most people choose either a friend or family member as long as they are 18 years or older and citizens of South Africa. If you select a family member or friend, it will be because you trust them. Relationship is the cornerstone to this decision but make sure that they have some of the following credentials too:
- Financially astuteness and manage money well
- Basic understanding of investments
- Own assets that they have invested in themselves
Although nominating a family member sounds excellent in theory, it can also have setbacks. For one, being a trustee involves work. There may need to be a fee involved for their efforts. Deciding the amount, balanced with what is fair to the beneficiaries, should be discussed upfront.
What is the professional option when choosing a trustee?
A lawyer or accountant who has become a trusted family friend or acquaintance is a good option. They may charge professional fees, more than a family member, but potentially a fair amount less than an appointed company. The only setback is that they won’t have the same institutional structure as a trust company.
Unpacking a professional trustee or trust company?
A professional or trust company may better serve you with their expertise in trust administration. These organisations have a history, experience and a framework for overseeing this type of administration process.
It may be money well spent depending on the enormity and complexity of an estate, and they will carry a hard line of objectivity. Objectivity will be hugely helpful if beneficiaries don’t get along or when the amount of money in question is significant.
Some of the setbacks may be that a professional trustee may be hard to remove if you are unhappy with them or inflexible because they are simply a trustee administration machine.
One way of addressing these concerns is to consider a co-trustee. You can nominate a trusted family member and a trustee company to work together. You can give this family member the power to remove the trustee company if necessary. The nominated family member can handle the family dynamics, and the Trust company can handle all the trust administration.
A great trustee doesn’t matter without a solid Will.
One can indeed find wisdom in the counsel of many. Seek advice from a lawyer, financial advisor, accountant and trusted family members to make an informed decision best for you and your family.
Whatever you decide on nominating a trustee, remember not to put off the finalising of your estate planning documents in the interim. Also, make sure that you have a solid, tailor-made Will that you can create on a platform like SmartWill.