The Importance of Appointing a Suitable Pension Trustee
Sep 01
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If you’re considering setting up a trust, it’s worth thinking carefully about who you appoint to manage the scheme over the course of its lifetime. The role of trustee can be extremely demanding and, even for individuals with a background in finance, a complicated proposition rife with pitfalls and hidden costs. Hence pension trustee appointment is a very important issue.
No matter the size of a trust or how numerous its beneficiaries, a trustee must be able to fulfil a long list of duties and obligations as part of their role. While smaller trusts may be suitable for family members or friends to act as trustees, larger trusts, involving more complex agreements and regulations can generate significant problems when conflicts of interest arise. In these cases, professional trustees are often an attractive option for settlors who want to ensure their trust is managed fairly and impartiality, fulfils its potential in accordance with their wishes, and promotes the interests of their beneficiaries.
Trustee responsibilities and obligations
Aside from acting prudently, honestly and in accordance with the original agreement, trustees must carry out any administrative issues relevant to the trust they oversee. These duties will include taking care of the taxation of the trust and any legal regulations or costs that apply to it. Legal regulation and taxation rules change frequently and this is an area in which a professional trustee, as opposed to a lay-trustee, such as a family member, may prove invaluable. A professional trustee with a financial background is much better-placed to be aware of and deal with these issues – and handle subsequent problems. Indeed, it is often the trustee’s duty to tackle these eventualities and failure to do so could result in financial penalties.
It is also necessary that trustees fulfil an advisory role: able to communicate with and inform beneficiaries and other members of their own responsibilities. Decisions made by trustees, regarding the trust, need to be unanimous – with this in mind, communication skills and comprehensive understanding of financial procedure are clearly crucial to the trustee role. Finally, trustees should also understand when and in what manner their trust’s funds and assets should be distributed to beneficiaries. However, other than a pension, when it is about other assets, a trustee can take professional help for trust administration from Cunningham Legal and other such law firms that can help them to carry out their role of a responsible trustee.
The benefits of a professional…
Since trustees must always act in the best interests of beneficiaries, a professional trustee, as an independent, impartial third party, will be able to avoid conflicts and problematic situations should those issues arise. In the eventuality of a scheme termination, a trustee’s role becomes more important than ever. When a trust is terminated, beneficiaries will look to the trustee as a source of continuity and reassurance – professional trustees, with their specific expertise, can shield scheme members from any fallout. Lay-trustees may struggle to handle these situations, especially if they have a close personal connection to beneficiaries of a given trust.
The basic requirement for the trustee is to act in the best interests of the beneficiary – but this means more than just administrative know-how or ability to enhance a trust’s assets. The experience professional trustees bring can be the difference between a poorly-run trust and one in which the settlor’s original wishes are fulfilled and the beneficiaries’ interests served efficiently and successfully