Trustee/Beneficiary Relationships – a problem or an opportunity?

Published September 1, 2016

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 some of 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. He’s studied these relationships in depth and speaks, writes and consults on ways trustees can build more productive relationships with their beneficiaries.

Hartley asked: How many beneficiaries would see their trust as burden or a blessing?

It’s a good question. It’s a question that forces you to think about things from a beneficiary’s perspective and stand in their shoes. I’ve been reflecting on the question a lot since leaving Denver.

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

In his book Trustworthy(which he co-authored with Kathy Wiseman), Hartley promotes positive stories and ways trustees can create productive relationships with beneficiaries. It’s a good read.

He reckons advisers, trust creators, trustees and beneficiaries must all take responsibility for ensuring trusts are created and managed in ways which enhance the lives of 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!). For the relationship to be productive, it needs to be viewed as “side-by-side”.

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 of a trustee and what it takes to be a good beneficiary.

A simple place to start may simply be asking beneficiaries Hartley’s question to find out whether they see 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.

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