| A solicitor
contacted us whose client had appointed him as a trustee,
along with the client’s surviving spouse. The
spouse was entitled to an income from the trust, but
the client’s children were entitled to the capital
growth, leaving the solicitor with a dilemma.
The Trustee Act 2000 places
the onus on trustees to ensure that a trust’s
performance is in the best interests of all beneficiaries,
even if these interests differ. To ensure they don’t
fall foul of their obligations, many solicitors enlist
expert financial help, particularly when they face difficulties
in balancing the needs of all concerned. |
This solicitor contacted us because he was worried that
a high proportion of his client’s trust was invested
in a relatively small number of UK shareholdings, managed
by a stockbroker. The solicitor, in conjunction with
the surviving spouse, required a medium risk strategy,
but unfortunately, the stockbroker’s definition
of medium risk was very different to the scientific
model we use.
Our analysis demonstrated that the existing portfolio
of FTSE 100 stocks was, in fact, a high-risk portfolio
– level 10 on our scale of one to 10 – and
that the trustee’s requirements showed that a
risk level of five would be more appropriate.
We were therefore instructed to reposition the portfolio
to reflect a more suitable asset allocation, which provided
greater diversification and was more in line with the
needs of all the beneficiaries. More importantly, from
the solicitor’s point of view, our involvement
demonstrated that a compliant review of the trust had
been carried out and provided an audit trail that would
satisfy the requirements of the Trustee Act 2000. |
