Clients wishing to appoint a corporate trustee, are often keenly aware of the duties and responsiblities inherent in the role of Estate Trustee. There are a myriad of decisions to be made in the course of administering an estate. Clients often ask how we go about making decisions and are particularly concerned with decisions to be made in the course of managing a discretionary trust.
Trusts often contain what is known as an “encroachment clause”. This provision allows for payments to an income beneficiary from the capital of the trust, under certain circumstances or conditions. The circumstances are set out in the trust document and can range from the most restrictive – “for emergency medical purposes only” – to the most liberal – “for the benefit of my spouse” or “the advancement of my children”.
Today I want to skip over the essential elements of the decision-making process (what factors should/must or should not be considered, the application of the even-hand rule etc.) and focus only on “who” (or “what”) actually makes the decision.
Where the trustee is an individual, this is obvious. But what happens where the trustee is a company? Although every trust account at Scotia Private Client Group has a dedicated trust officer, discretionary decisions are made via committee. While many decisions are made at the branch level, more significant decisions are referred to our Discretionary Powers Committee.
This approach ensures that decisions do not vary depending on which trust officer has carriage of the file. It also enables the trustee to bring appropriate objectivity, impartiality and expertise to all decisions. Many clients prefer this approach over leaving the important decisions to Uncle Bob.
If recent scientifc research is to be believed, there is one more thing we could be doing to ensure we’re making the best decision: drink a bottle of water first. According to a recent article in The Telegraph, people with full bladders apparently make better decisions. I’ll be sure to make this recommendation at our next committee meeting!
Thanks for reading.