Whatever the reason why you’re fed up with your Trustee, then Forward Group are here to help you understand how to switch and focus on your future.
The most important part of switching is to ensure that the transfer is seamless and the end result is a new relationship that delivers on, or we hope, exceeds the expectations of the Settlor and Beneficiaries.
There are several factors to consider when transferring to a new Trustee.
- Understanding the context: Before making any changes, it’s crucial for the new Trustee to understand why the relationship with the current Trustee has deteriorated or changed. The person who has instigated the change should be honest with Forward about the reasons for the transfer. This can help ensure a smoother process and prevent similar issues occurring in the future.
- Viability of the Trust: Assess whether the Trust remains viable given the costs involved. Does the structure still work from a tax and personal perspective?
- Length of the process: The time the transfer will take is largely dependent on the complexity of the Trust structure and assets. Factors such as the number of Companies under the Trust, the jurisdiction of the underlying assets, the complexity of its activities, and its value can influence the duration. Forward will also need to understand the parties connected to the structure along with any associated risk factors. Straightforward transfers can take up to eight weeks to complete.
- Authority to remove and replace the Trustee: Determine who has the power to remove and replace the Trustee. The terms of the Trust will likely provide for the Settlor, Protector, or others to appoint and remove the Trustee. Beneficiaries may sometimes challenge the removal and appointment of a new Trustee. A Deed of Retirement and Appointment (DORA) will need to be arranged which outlines the terms of how the current Trustee steps down and for Forward to take over. The DORA details the parties of the agreement, sets out the terms of the Trust Deed, and ensures that the necessary consents are obtained. It will also include indemnities on behalf of the retiring Trustee regarding any liabilities for seeking reimbursement while they were Trustee.
- Exit fees: Be aware of the exit fees charged by the retiring Trustee. These fees can be based on value of the Trust or fixed and may not necessarily reflect the amount of work for the transfer. It is important to agree on these fees at the start. Ensure that any outstanding accounts and administration work, especially statutory work for the Trust or any Companies it owns, are addressed before the transfer takes place or that Forward are advised of issues to be dealt with as the ingoing party.
- Due diligence by incoming Trustee: Forward will need to conduct a due diligence exercise including proof of identity and address verification. We will need to understand the provenance of the original funds settled into the Trust, especially if it’s an older Trust established before certain regulations were introduced. The Trust Deed will also be reviewed for any unusual terms that might pose challenges for Forward as the new Trustee. Any banking services provided to the structure will also need fresh due diligence for relevant parties as a result of the change of Trustee.
- Tax Advice: Securing up-to-date tax advice is crucial. Before the transfer takes place, Forward needs to understand the tax implications of the Trust structure itself and any potential tax liabilities for Beneficiaries based on Trust assets and/or distributions.
- Additional Services: The current Trustee or administrator might be providing other services, such as banking or lending facilities, which might not be accessible if the Trust is transferred. Forward’s fees for taking on the new responsibility are detailed here.
- The Role of the Regulator: Transferring trusteeship can be a complex and sensitive process. While many transfers are handled with utmost professionalism, not all meet the expectations associated with a professional Trustee. Conflicts can arise particularly if the Beneficiaries are unhappy with their current Trustee. All Jersey regulated Trust Company Businesses (TCB) must abide by the TCB Code of Practice issued by the Jersey Financial Services Commission (JFSC) to ensure they act in the best interest of their client with integrity and honesty. If for any reason, you feel a complaint on the current TCB is justified, this can be done via their Compliance Officer or to the Channel Islands Financial Ombudsman (CIFO).
At Forward, we focus on your future and our first step forward is to ensure that we understand everything needed to make the transfer seamless. We will act with discretion, and we will confidentially discuss your requirements with you. We will collaborate with the outgoing Trustee as far as possible when the time is right to agree responsibilities, outstanding work, terms and timelines. We will agree our fees with you from the outset and discuss how we wish to work together as your new Trustee.
Read our Guidance note on Trusts or take a look at our Fees to understand more. Then please contact us to focus on your future and take a progressive step forward.