What I can tell you, after being a professional trustee for 50 years, is that trusts are synonymous with succession planning in the western world, although in some countries, such as South America, they are of a distinct variety when compared with those traditionally found in other parts of the world where for centuries they have become ubiquitous in the planning of international estates.
The structure of a trust is not necessarily complex, but the preparation of the deed itself can be. It calls for expertise and this is where qualified trust consultants in Panama come to the fore. Trust consultants frame the trust, making sure all its working parts function properly, while a trustee is appointed to administer the finished product.
A trust deed that is drafted well will serve as a compass for the trustee. For this reason, it is not unusual for the trust consultant (usually a firm) who has drafted the deed to be appointed as an Adviser to the Trustee. In a sister article on Business Advisory Services it is very easy to see how trust consultants in Panama can also come under the same umbrella. If necessary, trust consultants in Panama can also guide the trustee concerning duties and obligations; this is more common when a layperson, and not a professional, has been appointed as trustee. Only in exceptional circumstances would I recommend this type of appointment, as the burden which you might unwittingly place on the layperson’s shoulders could prove to be daunting, at the very least, and should he lack sufficient competence he may, in the end, see his appointment as a curse.
Even where a qualified trust consultant has put the trust together, administering it efficiently is a very different matter. A layperson, unless he has suitable training – an accountant, for example – could soon find himself in deep water, much to the detriment of the trust, its beneficiaries and the settlor. Bad administration by a family member or close friend can lead to bad blood; in my experience money squabbles can produce a very powerful dose of malevolence and ill feeling.
Let’s now consider some important components that the ideal trust deed should cover. You may wish to create your trust for reasons of continuity within the body of your will; in doing so, you may also consider it advisable to appoint the same party to serve as both your executor and trustee (this, of course, might depend on the specific surrounding circumstances). I repeat the caution, however, about using laypersons rather than professionals.
Using a professional has several important advantages: impartiality, continuity, as well as related business services possibly advantageous for the administration of the trust, and, of course, a level of competence derived from suitable qualifications and experience. All of those factors are important for the protection of wealth and for those who will benefit from it, such as widows, young children and charities.
In order to anticipate the many twists and turns ahead, skilled trust consultants in Panama will present a series of key issues:
- Will the trust be revocable?
- Can the terms be amended, and, if so, by whom?
- Is the class of beneficiaries discretionary, and, if so, who will exercise the power?
- In general terms, what other important powers should be included, and who will exercise them? Flexibility and the minimum of restrictions will help the trustee in his task. This can be of great importance for the trust’s investment policy, for example.
There are many more issues but I just wanted to highlight some of those I considered particularly relevant when I was drafting the first trust law for the Turks and Caicos Islands in 1979.
If you wish further insights into this subject, I can recommend several articles which appear under the heading Trusts, Wills and Foundations in our website’s List of Guides.