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Articles by Anthony Strevens

Why are Professional Trustees so annoying?

AUTHOR: Anthony Strevens

POSTED: 09 May 2019

Ever have a property settlement about to go through and at the last minute your professional trustee has held up the game by asking pesky questions like “Why are you buying this?” or “Is this the right entity to be buying it in?”

What about those times when you’re arranging a simple re-finance and just when everything seems to be sorted your professional trustee wants to know if you’re getting a good deal or if the loans are in the right place or, even worse, if you should be offering up all your property, your future and your first born as security? How annoying!

But hang on, did you really want to offer up your first born as security? Or buy a development property in your family trust? Or sign up to a pyramid scheme? By asking these ‘pesky’ questions your professional trustee is simply doing their job, a job which you pay them for. They are looking out for the best interests of the beneficiaries of the trust and by doing so are effectively forcing you to do the same, meaning that you are meeting your obligations as a trustee too. If your professional trustee is not annoying you then they’re not doing their job. If they are not doing their job then they are a sham. If they are a sham, then you need to watch out because your trust may be one too.

I know what you’re thinking. You already checked with your accountant at GRA and they said the structure was good, the terms were fine and everything was as it should be, and you’re still getting questions from the professional trustee? Well good, because the decision-making process is one of the most important parts of having a professional trustee.

The professional trustee will check all sorts of things, including whether the transaction is a sensible one. For example, one GRA client was saved from selling their property for $500K less than it was worth because the professional trustee made the effort to check. The professional trustee will also look at things like debt structure and the trust’s asset and liability position (to ensure the trust assets aren’t being exposed to risk and thus potentially hurting the beneficiaries).

The emails, the trustee minutes and the rest of the audit trails that evidence a decision-making process involving all the trustees is exactly what you need to show that you have a bona fide trust structure whereby the trustees are considering the needs and the requirements of the beneficiaries and making decisions accordingly. This is what you’re paying your professional trustee for and it prevents the trust from becoming a sham. It’s good stuff; you should appreciate it even though it’s annoying.

As for your next question: “But why is it happening at the last minute?” Well I think you need to ask yourself and your solicitor that one. It’s up to you to keep your professional trustee on notice about your upcoming transactions and any solicitor worth her or his salt will make sure that the professional trustee has the documents they need well before any settlement date approaches.

So the next time you need your professional trustee and you find the process annoying, make sure you shake their hand, give them a pat on the back or a hug (if appropriate), because they’re obviously doing a good job for you.

Request a Meeting

Anthony Strevens
Business Advisory Director

09 522-7955

[email protected]

© Gilligan Rowe & Associates LP

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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.

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