One common complaint against trustees is that they reduce their jobs to the criteria of just not being sued. Trustees who adhere to this way of thinking do as little as possible, taking the safest route and sticking to the status quo. Today, nontraditional investment vehicles are compelling alternatives to blue chip stocks and bonds. Areas such as estates, non-U.S. currencies, direct private investments and hedge funds are an
integral part of large foundations’ investment programs. Individual benefactors and their descendents will soon expect their trustees to have a plan to incorporate some of these alternative venues. It might eventually be necessary to prod trustees, through a national Beneficiaries Bill of Rights, to ask for outside help in areas in which they have no expertise.
Touchy issues, such as religion, politics and sex, should be considered in
selecting a trustee.
If being of any particular religion, party, or preference ensures high ethical standards and an ability to empathize with the beneficiary, I am all for it! But in my experience, race, gender, religion and politics have no direct correlation with a potential trustee’s ethical character.
Values change. Since perpetual trusts are now available in places such as Alaska and Delaware, the best protection for a benefactor is to build flexibility into the trust document by allowing beneficiaries to have the right to remove the trustees in cases where they no longer fit the bill.
Children need no more than a basic knowledge of money management. Advisers and trustees can provide them with whatever information they require.
Since financial management is not rocket science, most beneficiaries, be they children or adults, ought to be able to grasp the few, relatively simple concepts necessary to successfully manage their accounts. There is a huge industry built on the premise that outside trustees or managers are necessary to properly manage trust money. Given the wealth of information on the Internet, I often wonder if most of what my industry promulgates isn’t just hype.
Trust beneficiaries want and deserve simple, understandable communications. They should be able to get this kind of knowledge without taking a college course in finance. Common sense and a healthy sense of skepticism should provide enough guidance for both benefactors and beneficiaries.
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