Practical points for Trusts

The inspiring Rhug estate in North Wales was the setting for our first Trustee Training Day yesterday.   It is now almost axiomatic that new company directors must go through some induction training so that they fully understand their role and responsibility, similarly with trustees or directors of charities.  So why not trustees of private trusts?  Their role is just as important, just as demanding and even more exposed to liability.  Yesterday we ran a pilot course for a small group of landed estate trustees and trust advisers.  We combined classroom work with discussion and a short visit to the home farm at Rhug.

It was a great opportunity to share experience of how different trusts actually work, and some of the challenges faced by trustees.  For example the frequency of trustee meetings varied between virtually never and four formal meetings a year, with two being the norm for many trusts.  A growing point of concern however, was the increasing amount of trust business which is conducted by email and telephone, and the challenge of ensuring that decisions made in this way are properly recorded and visible.  ‘Cloud’ sharing of vital information is beginning to creep over the horizon and it seems likely that the more progressive estates will be making much more use of these technologies in the future.

Another challenge is the difficulty of balancing the interests of different beneficiaries – for example beneficiaries of quite different ages.  It is really important that trustees occasionally stand back from routine trust business and refresh their thinking about the purpose and role of the trust, that this is done rigorously, and with an appropriate degree of transparency as far as beneficiaries are concerned.  A careful record of these deliberations is vital.  Not only will this stand as a guide for the trustees themselves, and a basis for future review, it will also be an important bulwark against a disgruntled beneficiary in future.

We concluded that effective trustees combine the following activities and attributes:

  • Constructive engagement and challenge
  • Direct personal knowledge of the settlor and his or her intentions
  • A blend of the professional and personal
  • While it is desirable that there should always be a professional trustee with direct knowledge of the principal asset class in the trust, an important question for professional input is whether that is better from ‘within’, i.e. a professional trustee or ‘without’, i.e. a retained professional adviser.  This is likely to vary with circumstances.  There may also be a case for the short-term appointment of specialist trustees where a particular project would benefit from their input.
  • Trustees should get out and about on the landed estate for which they are responsible from time to time and make sure they are familiar with the assets which they control

We were also able to see the farming operation at Rhug with the help of the farm manager.  This is an organic system, well known for its herd of bison.  The 50 or so bison are complemented by beef cattle (Angus beef for the farm shop and online supplies from Rhug Organic) and a flock of sheep.  Romney ewes until last year, these are now being replaced by Northern Mules for crossing with Leicester rams.  There is also a small poultry rearing enterprise, mainly for sales through the farm shop.  The Rhug farm shop is well known to travellers on the A5 to the west of Llangollen, where the restaurant and quick-stop are also located.  Estate manager Phil Hughes has also been undertaking some pioneering work on ground source heat technology on the estate.  The estate website is well worth a visit to see the work of a progressive estate ‘in action’.

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4 Responses to Practical points for Trusts

  1. alan.spedding@btopenworld.com says:

    Thanks Charles – very timely – just looking for something for this week’s RuSource.

    Coincidentally I am working with Lord Newborough – we are fellow judges in the FW Diversification Farmer of the Year Award. Rhug won it last year – amazing enterprise!

    Hope you are well

    Alan

    Sent from Windows Mail

    • Thanks Alan. Phil Hughes is the estate manager, I was his tutor when he studied at Harper Adams in the early 1990′s. He has done an amazing job at Rhug. Look forward to seeing RuSource.

  2. alan.spedding@btopenworld.com says:

    Charles

    You say “our first Training Day” but don’t, I think say who “we” are!

    Sent from Windows Mail

    • I had the idea some time ago. I asked Phil Hughes what he thought when I visited him at Rhug last year, positive response so I worked up the programme, Phil sorted out the facilities and between us we invited various people. The idea is that it can then be repeated at other venues, either as an ‘open’ session like yesterday’s or as a ‘closed’ session for a particular group (of trustees, advisers or whatever). The emphasis would be a little different between each audience, but the core elements would be the coverage of trust essentials, and the balance between ‘chalk and talk’ and more general discussion about trustees and trusts. If there is an interesting farm or estate to look at as well, so much the better!

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