When establishing a family trust, one of the most fundamental decisions you will have to make is on who will serve as trustees of your Trust.
A trustee can be an individual or a company that is appointed by the settlor (the founder of the trust) for purposes of holding or managing and/or administering the trust assets on behalf of, and for the benefit of the intended beneficiaries. A company that is licensed to provide trustee services is known as a corporate trustee.
Off the top of your head, you may have a few people in mind such as your relatives, a close friend or your lawyer who you may want to appoint as the trustees of your family trust. However, there are several reasons why it is advisable to appoint a corporate trustee solely or jointly with your proposed individual trustees.
These include: –
1. Perpetual Succession: –
Unlike individual trustees, a corporate trustee has perpetual succession which simply means that it does not die. In addition, it is not limited by old age, physical or mental incapacity or supervening personal responsibilities that may otherwise prevent it from undertaking its duties.
For this reason, appointing a corporate trustee solely or jointly with other individual trustees ensures the continuity and timely administration of the trust such as a dynasty trust (a trust that is established to preserve family wealth and continue for several generations).
2. Reliable and Professional Services: –
The appointment of a corporate trustee safeguards your estate and ensures that you access the right expertise and professional services required for the effective administration of the trust.
Unlike individual trustees who may not have the requisite skill set to administer the trust, corporate trustees have the benefit of drawing from its skilled, experienced and professional team to ensure that its clients enjoy reliable and professional services. In addition, since corporate trustees are corporate bodies with perpetual succession, the beneficiaries can be able to hold them to account in the unlikely event of unprofessional conduct or breach of trust.
3. Ensure that your loved ones are not unduly burdened: –
Appointing a corporate trustee for your family trust relieves your loved ones of the additional burden of managing and administering the trust being as they may already be committed in their personal businesses or are in full-time employment. Such divided attention may cause laxity in undertaking trustee duties and expose the trust to mismanagement, tax liabilities or other legal liabilities.
4. Prevent Family Wrangles
The unity of family members is key to sustaining the family trust and strengthening the relationships within the family. If the trustee is a family member and the beneficiaries do not agree with his or her actions or decisions, this could lead to bitter conflicts within the family. In addition, due to their close familial ties, the trustees may be afraid to make professional but unpopular decisions which are in the best interest of the trust, for fear of severing their relationship with the beneficiaries.
On the other hand, a corporate trustee is an innate body that cannot have such relationships and therefore appointing it can help prevent family disagreements over your estate.
How we can help
Gabael Trust Corporation Limited is a full-service premier company that provides independent and client-centric fiduciary and corporate trustee services in Kenya. We can be appointed to act as corporate trustee in your family trust, charitable trust and non-charitable trust, jointly or solely with other individual trustees. We also offer trust protection services by acting as an Enforcer to ensure that your trustees fully comply with the terms and conditions of your trusts and that they do not engage in any breach of trust or other malfeasance.
At Gabael, our clients are our first priority and we welcome you to take advantage of our excellent, professional and cost-effective trustee services. Get in touch with us today!
If you have any further questions, or would like to talk to someone about establishing a family trust, make an appointment with us or contact us through email@example.com.