People establish trusts for many different reasons and in different ways. For example, trusts provide asset protection for vulnerable beneficiaries and tax planning opportunities. They can be created during a person’s lifetime or on death in the form of a Will trust.
Key to the successful operation of a trust is the identity of the trustees. It is imperative that trustees are able to work together effectively in the best interests of the trust beneficiaries. Generally, trustees make decisions unanimously so a breakdown in the relationship between trustees can prevent the trust functioning properly or even at all.
Settlors of lifetime trusts might well appoint themselves as trustees initially perhaps with co-trustees. That is not possible for a Will trust, of course. For Will trusts and for lifetime trusts which are likely to continue beyond the settlor’s death, thought should be given to who will take on the running of the trust in time. In either case, it can be helpful to appoint a professional trustee alone or to support lay trustees run the trust. A professional trustee can serve a very useful function by providing objectivity on difficult decisions which have the potential to cause conflict between trustees.
Individuals such as named solicitors can be appointed as a trustee but if is increasingly common for a trust company to be appointed. Michelmores Trust Corporation Limited (MitCo) is commonly appointed rather than individual Michelmores solicitors. MitCo acts as an impartial voice alongside family trustees and provides legal advice on the proper administration of the trust (although Michelmores does not have to be appointed in order to provide legal advice to existing trustees, of course). MitCo can also act alone as trustee should there be no suitable co-trustees to be appointed for whatever reason.
The distinction between appointing individual solicitors or a trust corporation will not matter in the day-to-day running of the trust as a client’s usual solicitor contact will continue to provide advice. Where appointment of a trust corporation can assist in a practical sense is when a particular solicitor retires or is no longer able to act for any reason. In that circumstance the trust corporation will continue without having to move assets into the name of the replacement trustee which would otherwise be the case.
Michelmores has a team of advisors with extensive experience of providing advice as professional trustees. If you have any questions at all or would like some further information on appointing a professional please contact Edward Porter to discuss.