Trustee / beneficiary relations

One of the biggest risks for trustees is often seen to be a disgruntled beneficiary.

I’ve often heard the trustee/beneficiary relationship described as a bit like an arranged marriage. It’s not only a relationship of trust and confidence, it’s a complex human and legal relationship.

While any relationship takes work, I suspect part of the challenge with the trustee/beneficiary relationship arises because it’s a relationship of circumstances, rather than choice.

Last month I attended the Purposeful Planning Institute’s conference in Denver. The conference is a forum for sharing and showcasing the latest legacy thinking and estate planning practices.

I had the opportunity to spend some quality time with Hartley Goldstone, a USA based expert on beneficiary/trustee relationships. Hartley’s studied these relationships in depth and speaks, writes and consults on ways trustees can build more productive relationships with beneficiaries.

Hartley asked: Does the beneficiary see their trust as a burden or a blessing?

It’s a question that forces you to stand in the shoes of the beneficiary.

Hartley’s observation is that too many trusts don’t preserve “family”, or “trust”.

In his book Trustworthy (which he co-authored with Kathy Wiseman), Hartley, they have captured positive stories of ways trustees have created productive relationships with beneficiaries. It’s a good read.

Hartley reckons professional advisers, trust creators, trustees and beneficiaries all need to take responsibility for ensuring trusts are created and managed in ways which enhance the lives of the beneficiaries.

I wonder if part of the problem lies with how trustees view their relationship with beneficiaries. Often I perceive trustees taking a “top-down” approach (with the trustee on top!). To be productive, my view is that the trustee/beneficiary relationship needs to be viewed as “side-by-side”., or as equals.

How well grounded are your trustee/beneficiary relationships?

From a good practice perspective, there’s an opportunity for trustees to take the lead in educating beneficiaries on how trusts work, the role and responsibilities of trustees and importantly, what it takes to be a good beneficiary.

A simple place to start may simply be asking Hartley’s question to find out whether a beneficiary sees their trust as a blessing, or a burden?

If a beneficiary does see their trust as a burden, what needs to change? (and let’s be clear, it may well need to be the beneficiary!)

Hartley's question is a great conversation starter. While anyone can ask the question, only a beneficiary can answer it.

Trust good practice.

Lindsay