Trust Fund Management Services

Who Should We Provide your Trust Fund Management Services?

Since the main purposes of setting up a trust fund are to protect and to grow one’s assets, choosing who is best able to provide the necessary management services is a decision that needs careful thought. It may also depend upon the version of this financial instrument that is to be used and this takes two possible forms. These are known as living and testamentary and are applicable, respectively, to a financial instrument established during the life of the owner (grantor) and to one decreed in a last will and testament, and which will, therefore, only be established upon the death of the grantor.

Of course, in the case of the type known as a living trust, one possible solution could be for the owner of the fund to assume the responsibility for providing the management services in person. To do so, however, will require them to have a sound knowledge of the investment market and its trends as well as having sufficient time and the discipline to maintain accurate records, handle any tax liabilities and to make the necessary payments to beneficiaries. Because it is often impractical for the owner to meet all of these commitments, it is more usual to delegate the task to a trustee who may be a friend, a family member or a professional individual or company specialised in this area. It is, therefore, important that trusteeship is seen not as an honour but as a serious responsibility.

One possible alternative to this route is a hybrid arrangement in which the trustee remains responsible for carrying out all of the day-to-day administrative tasks but chooses to outsource the responsibility for investment to a financial specialist. In each case, the grantor may also act as a co-trustee.

Whichever of these options you choose, appointing someone to conduct the management services for your trust fund is an act of faith. Although they will be bound by law to comply with your instructions, you will need to consider the implications very carefully when you compile them. As the grantor, you are at liberty to make any stipulations regarding the fund’s management that you may wish, such as how much and how frequently the various beneficiaries are to be paid. Alternatively, you could choose to simply provide a few guidelines and to rely upon the discretion of the trustees to apply them in a manner that is consistent with these while also serving the best interests of the fund and its beneficiaries.

As with most choices, cost inevitably tends to play a role and there is no doubt that appointing a friend or a relative as your trustee could save your some initial expense. However, unless you are very confident that whomever you choose has the time and the knowledge required to provide effective trust fund management services, you could be doing them a serious disservice and perhaps risk incurring far greater losses in the end.

What, in practice, is needed, is a trustee that has the experience, the investment skills and the legal knowledge to ensure both performance and compliance. With offices in both Pretoria and Johannesburg, Secure Legacy fields a team of specialists that ticks all of these boxes and more.