A trust is an important part of any client’s estate plan, providing one of the only legal vehicles by which a client can divest himself of his assets, yet still remain involved in their day-to-day management.
No matter how well your trust deed is prepared, it will all come to nothing if the trust is not properly administered. The greatest danger facing most clients who create trusts to house their wealth is the trust being successfully attacked as their alter ego, rendering the trust null and void ab initio. To avoid this, it is essential that trustees are always kept involved in the trust’s decisions and administration, guarding against any attack on the trust on the basis that only one trustee is making the decisions and administering the trust.
The following are the fundamental rules which trustees and parties that transact with trusts should be wary of:
- Ensure the trust is properly established
- Ensure trustees who act have letters of authority
- Guard against the rule of subminimum number of trustees
- Ensure correct decision-making process was followed
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