We spoke with Katrina Leung, Director - Trust Services in our Hong Kong office, to understand what factors clients should take into consideration when choosing their trustee and trust administration team.
Finding the right trustee to oversee your trust is crucial, especially because setting up a trust is often a long-term solution - so your relationship with your trustee may be for many years. Your trustee will be responsible for carrying out your wishes and managing your assets on behalf of your beneficiaries; it is therefore essential to appoint a trustee who is knowledgeable, financially responsible, and reliable. Choosing the wrong trustee can lead to mismanagement of assets, delays in distributions to beneficiaries, and even legal disputes. Taking the time to carefully consider and select the right trustee can help ensure that your wishes are carried out and your beneficiaries are protected.
A Strong Start Matters
“Trust administration is essentially a relationship business,” says Katrina. "We want to build trust and a strong working relationship with our clients from the very beginning. We understand that right from the onboarding phase it is our job to provide context, to educate, to manage expectations, and to build a solid foundation for the relationship as it commences. This way our client relationships are set up to last and flourish for many years to come.”
Look for Depth of Experience Within the Trust Services Team
Trust administration is a specialised field that requires a deep understanding of the financial and legal concepts that govern it. “At Trident Trust, we have many functions within our trust services team: from compliance to accounting and corporate, there is always a strong support network for the trust administrators. With the right level of support and experience within our trust services team, we can see potential challenges coming, and we know how to solve them before they become problems for the client,” says Katrina.
Value Attention to Detail
Note the kind of questions a potential trustee asks in your early interactions. Trustees have a fiduciary duty to act in the best interest of their beneficiaries, which requires them to exercise a high level of care and due diligence in carrying out their responsibilities. “Trustees must pay close attention to the type of assets they are managing,” say Katrina. “This includes understanding the specific terms of the trust, monitoring the performance of the assets, and ensuring that all legal and regulatory requirements are met. Any errors or oversights in these areas could negatively impact the beneficiaries and open up exposure to liability.” If it seems like your potential trustee is asking many questions before establishing a trust, this is most likely a good sign that they take their fiduciary responsibilities seriously.
They Will Stay on Top of Regulatory Changes on Your Behalf
A good trust administrator should have a deep understanding of the laws and regulations governing trusts. Laws and regulations keep changing, and as such your trustee should be able to stay on top of these changes and develop efficient strategies for managing the trust's assets and work with the right professionals to get specialised guidance where needed. “We spend a lot of time keeping ourselves up to date with the regulatory environment,” says Katrina. “We have the knowledge and skills to proactively deal with any changes when the need arises, and thanks to the training and education our team regularly receives, we are able to stay ahead of regulatory changes and be prepared for them, rather than simply reacting. We also work very closely with experts in legal, tax, regulatory and other technical fields to get relevant advice when needed. Lastly, communicating with clients and helping them stay educated about impending regulatory updates is something we take seriously."
Be Wary of “Yes, Yes, Yes”
Your trust administrator is there to provide you with options and solutions but be wary of a trustee who only ever tells you what you want to hear. “At Trident Trust, we strive to provide our clients with the best possible service and offer tailored solutions for them. But there are certain aspects of the administration of a trust that are out of our control - for example, sometimes there is little we can do about increasingly stringent bank requirements or disclosure obligations. We anticipate such roadblocks where we can and manage our clients’ expectations to steer them through the process. Being a ‘yes man’ won't bode well in the long run and it is important to be wary of any trust administrator who acts like that,” says Katrina.
Beware of Potential Conflicts of Interest
Trustees should have policies and procedures in place to manage conflicts of interest and should act in accordance with their fiduciary duty to act in the best interest of their clients. “We have set up our business in such a way that we do not offer services that might lead to any kind of conflict of interest for our clients,” says Katrina. "We therefore do not provide investment management, legal or tax services and needs in those areas are met by independent business partners in the industry, such as banks, external asset managers or law firms."
Your Success is Our Success
When you have worked with your trustee for a long time, they become part of the family. You should be able to imagine this when considering trust services. “When we review structures, we are looking past the next 5, 10 or even 25 years,” says Katrina. “It is a long-term relationship. We want to understand what could go wrong in the future of each individual trust and mitigate or plan ahead for it. Our strong sense of fiduciary duty means that we will always act in the best interests of the client - because their best interests are our best interests too.”