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Case StudyTrusteeInvestmentSummary:We developed a comprehensive financial plan for atrust, which satisfied the trustees need to diversifyassets and look after the interests of the beneficiaries ina tax efficient manner.
Background:Following a referral from a local solicitor, we wereintroduced to the trustees of a newly created trust. Thetrust had been set up following the death of the father oftwo of the trustees and the third trustee was a friend ofthe family. The solicitor was advising the trust on thelegal aspects of their duties and their inheritance taxposition but was unable to give financial advice. Thetrust had been set up for the benefit of various familymembers and the trustees required advice on how bestto fulfil their responsibilities to look after the interests ofthe different categories of beneficiaries.
Problems/Challenges:The Trustee Act 2000 sets out a number of duties andresponsibilities for trustees such as the duty to diversifyassets, take professional advice and look after theinterests of beneficiaries. Since the Trust had complexaims, the trustees needed advice on the mostappropriate product and investment strategy for thetrust money.
The trust needed to balance the need for income ofsome beneficiaries while securing the future capital forothers.
They also needed to keep the trust money invested in adiversified way to generate the best long-term returnsfor the trust. As part of this an ongoing review wasnecessary.
Our approach:We met with the trustees and the solicitor to establishthe aims of the trust and the strategy for investment.
We developed a financial plan for the trust, building onassumptions made about investment growth, incometaken and the effect of tax such as inheritance tax. Thisgave the trustees an overview as to how the trustinvestment should develop over time.
Following this, we established a risk profile for the Trustand built a portfolio of investments to aim to generate anacceptable level of income whilst growing the capital. Aspart of this we recommended an investment vehicle todeal with the tax position of the trust whilst givingmaximum flexibility.
Outcomes and Impact:By working with the solicitor we were able to create aunified approach so that advice was consistent on thelegal and financial sides. We were also able to refer thetrust to a local specialist accountant, who could advisethem on their requirements to liaise with the Revenue.
The trustees were able to satisfy their duties to look afterthe interests of the beneficiaries by taking specialistfinancial advice and diversifying the portfolio. Becausewe created regular reports for the trustees they were ableto demonstrate their compliance with their duties,meaning that they were less likely to come into conflictwith the beneficiaries at a later date.
Continuing Support:Each year we schedule two reviews with the trustees.The first will be to re-evaluate the trusts financial situationand revise its financial plan so that we can take intoaccount any changes to its circumstances and re-assesswhether it remains on target to meet its long-term goals.
The second meeting reviews the trusts investmentportfolio and aims to keep it on track towards its goalswhile taking the least risk needed to do so.
Please contact usfor further details:
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