Trustee decisions – tough decisions

Published April 7, 2016

Trustees have decision making roles.  Some decisions won’t always be easy.

Decisions can be tough for many reasons.  For example:

  • Disharmony between parties associated with the trust
  • The need to balance competing interests
  • The monetary or emotional value associated with a decision
  • The best course of action may not be obvious
  • The complexity of matters at hand
  • Pressure to make a decision based on limited information
  • The significance of the decision in the context of the trust
  • The inexperience of the trustee

Handling tough or significant decisions is part of the challenge of being a trustee.  When trustees take on the role, they won’t always know what they will have to deal with. Each situation’s different.

Sometimes trustees will find that whatever decision they make, not everyone will be happy.  That’s part of the job but it can feel like a no-win situation.  Emotions will often be running high.

Big decisions can have unforeseen consequences which may only become known in years to come.  Another trustee could be sitting in the trustee chair when that happens.  Or, you could be the trustee sitting in the chair having to deal with a decision made by a former trustee.

It’s important trustee decisions are made with an appropriate level of care.

When trustees are faced with a particularly tough or significant decision, it’s a time to rely on good process.

Here’s a broad decision making process that may be useful for those times:

  1. Identify the decision required and the trustees’ authority for the decision.
  2. At an early stage take advice on any matters which the trustees do not understand.  This may include the process intended to be used for the decision.  Consider forming an advisory panel.
  3. Communicate the decision making process and consult interested parties (E.g. settlors, beneficiaries).  People respond better if they have had a chance to make their views known.  Consultation enables trustees to intercept potential issues at an early stage.
  4. Consider and assess the relevant facts and options available.  Weigh up the merits and consider the implications and any potential risks.  Shape a preferred option.
  5. Make a decision and record it in writing.  Keep a copy of the information and advice relied upon as part of the trust records.
  6. Implement the decision and track the outcomes.

Tough decisions can involve uncertainty. Often the best option or course of action may only emerge and become clear through the process.

When the pressure goes on, the best antidote for uncertainty is good process.

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