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’.