Making sure your goals are met

PUBLISHED : Tuesday, 23 October, 2007, 12:00am
UPDATED : Tuesday, 23 October, 2007, 12:00am

Establishing a trust involves careful planning, defining objectives and ensuring that trustees are able to deliver the services they say they can.

Henry Lam, regional head of wealth planning (Asia-Pacific) at UBS Wealth Management said it was important for those who require a trust to think carefully about why they are setting one up and who should ensure that it is administered efficiently.

Ultimately, it is the purpose of the trust that determines how the assets are invested, and it is the responsibility of the trustee to see that the purpose is carried out. According to Mr Lam, a trust can involve a fairly simple structure - to set aside assets to pay for education and support the needs of children - or cover complex business empires, multiple beneficiaries and philanthropic issues.

'Individuals and families set up trusts for a wide variety of reasons, to save on estate taxes, provide for future generations or incapacitated family members, and pass on a family home or business, among others.

'The main consideration should be about protecting assets from personal risk, and ensuring the welfare and outcomes for your chosen beneficiaries,' Mr Lam said.

Today, people live complicated lives. Second marriages are common, families own properties in, and live in different jurisdictions, adding further complexity to trust structures.

Choosing the right trustees and the right mechanism for naming successor trustees over time, has grown particularly important as more wealthy families create trusts to last for several generations, Mr Lam said. The complexity and sensitivity of issues related to family continuity and wealth management can vary widely and range from taxes, volatile economies, spendthrift children and political uncertainties.

Mr Lam said the ability to engage the next generation of family members, allows beneficiaries to understand the extent of the family wealth, how it is managed, and the problems and responsibilities that it brings.

'Each family will want to make the arrangements that suit their situation,' Mr Lam said.

Without specialist advice which looks at the different aspects of establishing a trust, it is all too easy to make decisions that could result in confrontation among family members leading to legal disputes.

Mr Lam said it is important for those setting up a trust to ask their trustees if they have the experience and skills to protect their assets for the future, create a tax-effective structure, prevent claims on their estate and prepare for possible changes within the trust structure.

He said UBS provides trust services as part of the firm's integrated wealth management services and, as one of the world's leading financial firms has a long and successful record of setting up and managing trusts.