Beneficiaries we know – or do we?

  • Author : Martyn Gowar
  • Date : August/September
ABOUT THE AUTHOR: Martyn Gowar TEP is a Partner at McDermott Will & Emery UK LLP and an Editor of the STEP Journal

I was musing the other day about the different issues that arise when dealing with beneficiaries, as opposed to advising a settlor. And, of course, the term ‘beneficiaries’ includes those who are more accurately described as ‘objects of the trustee’s discretion’.

As professional advisors, we get to know our settlors well, usually, and we need to do so if we are to produce for them the sort of trust documentation (including wills) that gets to the bottom of what they really want to do for those beneficiaries. But while we can choose our clients, we get landed with the beneficiaries whoever they are, and we all know, only too well, how different one can be from another.

Just think of a few of the different sorts of beneficiary we all come across. There are the people who always respect and are grateful for what they are told or given, who ask intelligent and informed questions that are positive and stimulating, but it all goes south from there. There are the overbearing people who always know better about the investment of the trust monies, the exercise of the trustee’s discretion, the exorbitant amount of fees, and the amount of time it takes to do anything – I often sense a feeling of injustice that they had not been chosen as trustees in the first place. There are beneficiaries who are supine, and who can be easily led by an advisor; others exercise selective amnesia about the benefits they have received, expecting the world to fall into place around them without making any effort to explain to the trustee what they are doing. Another category is the beneficiary who takes it out on the trustee when the real issue is a grievance with a sibling. This can often be found in cases of second marriages, where the relationship between the children of different marriages can be fraught with emotional and personal difficulties. Then there are problems where beneficiaries come from different cultural backgrounds, whether of a religious belief or of the society in which they have grown up, perhaps when the parent was, during their youth, working in a very different overseas background. I could go on, and I am sure that you could think up from your own experience a whole range of different classes and categories that create challenges for advisors and trustees.

“We can choose our clients, but we get landed with the beneficiaries whoever they are”

We are required to try to both empathise and sympathise with the beneficiaries, because the trust fund is there for their benefit and not ours. It is hardly a surprise if, from time to time, we read the signs wrong and misread the emphasis or the degree of importance that one factor has with another in the relationships with a settlor or testator. And often, the last thing the client sees when giving instructions for a trust or a will is the tension that may be clear to any objective observer. All one can do is be sensitive whenever one meets client families, and observe the dynamics of relations between those who may not be our clients, but who may well become beneficiaries to whom we may become answerable.


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