3 effective ways financial planners make a trustee or attorney role easier

Coronavirus and the subsequent lockdown have brought some seminal moments and reminded us life can change both dramatically and quickly.

One of those moments was the story of television presenter Kate Garraway, who spoke about the financial challenges she faced after her husband Derek Draper fell seriously ill with Covid. Key to her problems was the fact there was no Power of Attorney in place, meaning she could not deal with his affairs as he lay critically ill.

While it was a sobering reminder of how vital Powers of Attorney are, acting as an attorney carries significant responsibilities and a requirement to show diligence at all times. This is also true if you are a trustee, which requires you to follow legal stipulations and understand the assets or holdings within the trust.

While this may sound daunting, there is good news. Working with a financial planner can help take the strain out of both roles, potentially helping reduce stress and time you spend carrying out your responsibilities.

Read on to discover more about each role and how a financial planner can help.

Attorneys need to demonstrate diligence and financial awareness

While being an attorney carries less responsibility than a trustee, there are still requirements to satisfy.

You could be acting under one of two types of Lasting Powers of Attorney (LPA), or both. The two LPAs are health and financial, and for this article we’ll concentrate on the latter.

These do not give you unlimited authority to make decisions on behalf of the person you’re looking after (otherwise known as “the donor”). That said, you have to demonstrate a good understanding of their financial situation.

You may also need to make complex decisions on investments, property, and taxation, so it will not surprise you to learn that as an attorney you’ll need to show that you’re:

• Keeping the donor’s finances completely separate from your own
• Not profiting from acting as an attorney
• Keeping detailed records of financial decisions and your rationale.

A trustee must act in good faith at all times

There are legal requirements a trustee must comply with while, at the same time, demonstrating integrity to ensure the best outcome for the trust’s beneficiaries.

If you act as a trustee, you’ll need to demonstrate that:

• There’s no conflict of interest between your personal circumstances and the beneficiary’s
• You clearly understand the beneficiary’s personal circumstances
• You understand the structure of the trust and its terms
• You can comply with your stipulated duties as explained in the trust
• You’re able to provide clear and accurate accounts or other information when required.

Trustees typically deal with property and financial issues, which may mean deciding on investments.

You will also need to understand trust taxation, which includes ongoing tax charges, the taxation of income generated within the trust, and different allowances. For example, the Capital Gains Tax (CGT) allowance for a trust is half the amount you have as an individual, taking it down from £12,300 to £6,150.

Financial planners can help you meet the responsibilities of both roles

As financial professionals often work with clients who are acting in either role, they have experience in the way they work and the relevant regulations.

This means they can help guide you through the requirements of your role while, at the same time, providing considered advice. This support can help you make decisions more easily and quickly.

As the advice the planner provides only relates to your role as an attorney or trustee, you can also show that you’re keeping your decisions separate from your personal finances.

Here are three further ways a financial planner can help:

1. All meetings are documented

Financial planners typically hold regular review meetings that are documented. It evidences the rationale behind any decision you make and why it is in the beneficiary or donor’s best interest.

2. Financial planners understand taxation

Whether it’s a donor’s personal finances or a trust, financial planners have an obligation to understand tax rules and their implications. They will always seek the most tax-efficient outcome for the individual you are looking after or beneficiary you’re acting for.

3. They can help you better understand investments

Financial planning involves an in-depth understanding of people’s financial situation and investments. This means they can help you fully understand a donor’s position and advise accordingly.

They can also explain any investment being held by the donor or in the trust, allowing you to make decisions with confidence and peace of mind.

Get in touch

If you are an attorney or trustee, or considering the roles, and would like to discuss how we could help you, please email us on info@harperlees.co.uk or call on 01277 350560.