Trusts and toy guns: why an independent trustee can better target support

Setting up a trust can help children with unique needs, but it can also place undue pressure when family members have to manage it.
 
A toy gun is one of the many unusual requests that Greg* has asked his trust to pay for over the years. But it was no laughing matter for Greg’s family, who found it hard to manage the trust while supporting the 30 year-old and his battle with substance abuse. 

“The challenge with Greg is that he can be very persuasive,” Equity Trustees National Manager, Trusts, Jonathan Guthrie-Jones, says.

“His family were trying to control the money but also wanted to show him emotional support and love. It created a conflict, which often resulted in them saying ‘yes’ to anything he asked for.”

That pressure took its toll and when the main person overseeing Greg’s trust retired, the family contacted Equity Trustees, which has built strong expertise in the area after managing trusts for more than one hundred years. 

“There was quite a large allowance being given outright without any questions,” Guthrie-Jones, says. “While the trust was meant to last Greg’s lifetime, it wasn’t going to last long at the rate it was being spent. He was also getting money for all sorts of strange expenses.”

The family agreed to appoint Equity Trustees as the new independent trustee to break the cycle. The organisation sat down with Greg and worked out a monthly budget although they still receive quite a few out-of-the-ordinary funding requests.

“There’s an element of subjectivity in approving requests, but we have multiple committees at differing levels in place to deal with such requests. It’s not left to the sole discretion of one person. We look at every trust and every individual individually to work out ‘who is this person and why is the trust there in the first place?’ We don't take a quick cookie-cutter approach because there are different reasons why trusts are set up.”

Trusts are being increasingly being set up by families to help minors, people living with disability, or mental health and substance issues. They now account for about 20 per cent of the trusts managed by Equity Trustees compared to 5 per cent just 10-20 years ago.

“In years gone by, trusts were set up with the sole purpose of protecting assets and an individual’s financial state, ensuring the assets eventually passed to the individuals of the deceased owner’s choosing. Given the community’s change in attitude to mental health and vulnerability, with the associated stigma diminished, we can see a rise in popularity in the creation of trusts for these purposes.”

The recommended minimum size of a trust is about $500,000 although once a trust reaches $1.5 million it can generate more income.
“We're not the trustee industry of old – that was a very stale, set in stone industry,” he says.

“The benefit we offer is being an independent entity that can say ‘no’ when we have to, as well as say ‘yes’, because we really understand what this money is there for and can manage it over the long term.”

* Name changed to ensure privacy.