Trustee due diligence – Look before you leap

Published June 25, 2015

One of the most important decisions a professional trustee will make is whether they’ll take on the job for a particular trust.

Recently I’ve seen a number of trustees dealing with problems that may have been avoided if there had been better due diligence and expectations set before they had said ‘yes’ to taking on the job.

Here’s another way to think about it.  Say you were invited to sail on a yacht to the Pacific Islands.

While the idea of sailing around the tropics sounds appealing, you’d want some assurances before going for things like:

  • What size yacht is it and what sort of condition is it in?
  • Who’s the skipper and what’s their experience?
  • Who else will be on board and what’s their experience?
  • What safety equipment is carried if something goes wrong?
  • What training might be required?
  • Is bad weather expected?

It’s too late to be thinking about these things when you’re two days out from land if you get my drift….

Your approach should be no different when you’re asked to become a trustee.

The time for asking questions and checking things out is before you say ‘yes’.  

Here’s a couple of rules I’ve found helpful with trusteeship due diligence:

Rule 1:  Before becoming a trustee, focus on protecting your best interests.

Rule 2:  After becoming a trustee, focus on protecting beneficiary best interests.

Trusteeship’s a job.  You have to know what you’re getting into, before you take it on.

You can download a copy of my trustee due diligence checklist “Things to check before becoming a trusteehere.

If you’re already a trustee, it might be a useful checklist to see if you’re on track.

I’ve always found that the extra effort you put in to get things off to a good start, pays off.

Trust good practice.

Lindsay

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